It might not have started well, but according to PNC Financial Services Chief Economist Stuart Hoffman 2014 is ending strong.
“We had a terrible first quarter most of us at the time attributed it to the polar vortex,” Hoffman said. “Then as the year went on it sprang back.”
Hoffman says the second and third quarters of 2014 were strong, job growth was good all year long and the market, despite a few dips, will end the year higher.
October saw a stock market correction of nearly 10-percent, but it was erased by the end of November.
Gross domestic product numbers for the year are yet to be released, but Hoffman thinks the national economy will end the year up by about 2.5 percent. On the employment front, 2.5 million new jobs were added to the U.S. economy in the first 11 months of 2014.
“We’ve seen part time employment go down, we’ve seen full time employment go up,” Hoffman said. “We’ve some of the better paying jobs … actually start to rise.”
Among the big gainers were the engineering, construction, nursing and teaching sectors. Unemployment is down from 7 percent nationally last year to 5.8 percent in November of 2014.
Job growth in southwestern Pennsylvania outpaced the national average in 2010-2012 but softened in the last two years.
“We are growing jobs here, we’ve seen the unemployment rate go down,” Hoffman said.
The November unemployment rate in Pennsylvania came in at 5.1 percent.
In the recent past, the energy sector has fueled job growth in the Pittsburgh region, but those gains began to slow in 2014. Some of that could be due to falling energy prices, but Hoffman thinks the lower gas prices helped Pennsylvanian’s keep more money in their wallet, which they then spent on consumer goods.
Pittsburgh-based PNC keeps track of a number it calls the Household Economic Stress Index. It combines unemployment, inflation and home prices to measure how financially secure families are in a given region. The lower the number the less stress the average household is facing.
“That measure has gone down dramatically," Hoffman said. “Households in aggregate … are probably in pretty darn good financial health. They’ve paid down a lot of debt, their houses are rising again and fewer are filling for bankruptcy.”
Hoffman said one report immediately following Black Friday showed a slowing holiday sales season, but he thinks the report was off base. All of the indicators he watches pointed to a strong holiday season, which will help the 2014 retail number end with a bang.
“It was more of an online shopping season than an in-line shopping season, so maybe the malls did not fair as well as the some of their online counterparts,” Hoffmann said. “We think when it’s all said and done this will be a pretty good sales growth, four to four and a half percent from the same period a year ago.”
Last year’s growth was 3.8 percent and Hoffmann notes that there is very little inflation included in the 2014 growth estimate. Making the number a little sweeter is Hoffmann’s belief that most of the spending is from cash in checking accounts, rather than from creating new consumer debt.
