Economist David Rosenberg expects a better 2014 than the “write-off for the economy” that was last year, though that doesn’t necessarily translate to the markets.
The chief economist at Gluskin Sheff + Associates believes 2014 will be a "surprise year" for the U.S. economy, similar to 1984, 1994 and 2004.
“In a nutshell, I feel like 2014 is going to feel a lot like 2004 and 1994 when the economy surprised to the high side after a prolonged period of unsatisfactory post-recession growth, as reparation of highly leveraged balance sheets delayed, but in the end did not derail, a vigorous expansion,” he said of the U.S. economy.
“That by no means guarantees a stellar year for the markets because as we saw in 2013 with a softer year for the economy and as for the markets, multiple expansion premised on Fed-induced liquidity can act as a very powerful antidote,” the chief economist at Mr. Rosenberg said in a recent 2014 forecast.
Mr. Rosenberg’s main point for this year is that the economy is “not at all suffering from secular stagnation,” but rather has gone through “a balance sheet adjustment process of epic proportions.”
He cited the periods after the dot-com bust and the recession of the early 1990s, and how things improved.
“The consensus view heading into 2004 was that the economy was never going to recover – what a surprise it then was to see the opposite and the Fed embarking on a tightening program in June of that year,” he said, referring to the tech meltdown that preceded it.
“Go back further to the banking sector financial repair that held back the recovery in 1992-93,” he added.
“Again, terms like ‘structural headwinds,’ ‘jobless recovery’ and ‘credit crunch’ abounded. Then look at what happened in 1994.”