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Report: Economic Index Signals Further Growth

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January 23, 2014 by   Leave a Comment

The U.S. economy is poised to strengthen in 2014 but perhaps not without some bumps along the way, according to an index that measures the nation’s health.

MarketWatch reported that the leading economic index rose 0.1% in December, marking its sixth gain in a row, the nonprofit Conference Board said Thursday (Jan. 23). The increase in the index in November was also revised up to show a more robust 1% advance.

The uptick in the index over the second half of 2013 was spearheaded by an improved manufacturing sector, rising stock prices, low interest rates and greater availability of credit.

Yet the latest report also contains some red flags. Only five of the 10 components in the index increased in December, down from seven in the prior month. Consumers also remained somewhat worried about general business conditions in the U.S. while higher mortgage rates could dampen home sales in the early part of the year.

Rates have been rising on the expectation that the Federal Reserve will continue to reduce its purchases of mortgage-back securities, a strategy that kept the cost of home loans exceedingly low in 2012 and 2013. Higher rates make it harder for Americans to afford to buy a new home.

Businesses, for their part, are still exercising caution while Washington moves to pass a new budget bill and tries to figure out how to raise the U.S. debt ceiling, the trigger for several market-rattling political fights in Washington over the past few years.

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