UCF economist: New year to burst current boost in economy
While the economy continues to trend upward as the holidays spruce up the spending scene, don't expect the trend to last much longer than the novelty of all those presents you're buying.
That's the most recent advice UCF economist Sean Snaith has for Americans. Despite lower gas prices and more employment opportunities, Snaith says the nation will definitely see an increase in commerce this month, but it likely won't continue into the new year.
"The 2014 holiday shopping season should be an improvement over last year's disappointing season," said Snaith, who is also the director of the Institute for Economic Competitiveness. "Lower gasoline prices will provide a little extra spending cash this season and should make consumers just a little more jolly, but next year we'll go right back to the slow pace of recovery."
Snaith said several factors will hinder new growth as January approaches, including rising bank interest rates and the Affordable Care Act. The air is ""literally being choked out of the economy," he said in regard to these new regulations.
"The Affordable Care Act, which mandates health insurance for all Americans, the Dodd-Frank financial regulatory reform law that oversees banks, and a large number of smaller regulatory actions with significant economic impact will likely make accelerated economic growth unrealistic in 2015," a release from UCF Today states.
Another reason the holiday season shows progress is that a hoard of companies hire temporary employees for the season, according to the release. This helps with employment numbers, but actually contributes to the underemployment issue.
However, there are some trends that show positive growth across the nation. Snaith said that consumer spending will continue to grow an average of 2.6 percent through 2017 and the housing market will show even more recovery. The release states that the housing market should steadily improve through 2016 "when rising interest rates take their toll and housing starts to level off."
"Bottom line: Enjoy the holidays, but one old acquaintance we can't forget is this sluggish recovery and, unfortunately, it will be brought to mind soon after the new year," Snaith said.