Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

ECONOMIC FORECAST FOR 2014 A MIX OF HOPE, SCATTERED CAUTION Series: THE ENTREPRENEURS

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

ECONOMIC FORECAST FOR 2014 A MIX OF HOPE, SCATTERED CAUTION Series: THE ENTREPRENEURS

Article excerpt

Entrepreneurs can spend a big chunk of their business hours putting out wildfires, so they miss seeing the forest for the trees. How can entrepreneurs chart a path to success in 2014?

Key economic indicators -- such as gross domestic product, the purchasing managers index, the consumer price index and the behavior of the public stock markets -- offer decent trail markers.

GDP is the market value of all goods and services produced within a given period of time. The Federal Reserve estimates next year's to grow between 2.8 percent and 3.2 percent. The Bureau of Labor Statistics is more bullish, predicting an average annual rate of growth for real GDP of 3.1 percent. Business appears to be getting better, though hitting the historical growth average of 3.2 percent might be a stretch.

How about business confidence? The purchasing manager's index (PMI), a survey of 400 purchasing managers by the Institute of Supply Managers, is a dependable measure. The highest PMI ever was 77.5 percent in 1950; the lowest was 29.4 percent in 1980. The November 2013 PMI stood at 57.3 percent; OK, but not great.

Other recent institute estimates are also useful. Manufacturing company sales are predicted to show an increase of 4.4 percent. Nonmanufacturing company revenue estimates indicate growth of 3.6 percent. The institute forecasts hiring increases as well: 2.4 percent for manufacturing companies and 2.1 percent for nonmanufacturing companies. Again, not great, but not bad.

How will consumers be feeling in 2014? The consumer price index is the classic measure of inflation, which impacts not only how much a customer can buy but also what a company can manufacture. CPI tracks the change in prices of a "basket of goods" used by the average household, ranging from breakfast cereal to gasoline to computers, even funerals!

The Federal Planning Bureau estimates the index will increase at a modest 1.1 percent rate in 2014. This is well below the annualized U.S. average of 3.3 percent, compiled since 1914. Not bad.

What if one of the signs along the path to success next year is just plain hard to read? …

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