Stocks in 2014

When N.C. State University economist Mike Walden speaks to groups, he’s often asked how the stock market is going to do. In this episode, he discusses the 2014 outlook.

“And you also know that sometimes I jokingly give the late Milton Friedman’s answer and say that stocks in the coming year will fluctuate. But seriously, looking first of all at 2013, it was a very, very good year for the stock market — on average, it was up 20 percent and really continues to run in the market we’ve seen since May 2009. All of the losses suffered during the recession — of course, the stock market was down about 50 percent — all that’s been regained, and more.

“So we really had a dramatic recovery in the stock market. Now, of course, stock values are fundamentally tied to company profits, and so to ask how the stock market will do, we really have to ask how our companies going to do — and specifically how are company profits going to do. And you’re always, always can have a combination of pluses and minuses on the economic landscape impacting companies and stocks.

“I think on the plus side in 2014, we’re going to see continued economic growth. We’re going to see more jobs created, more spending by consumers and, I think, growing a global trade. All of those things should boost stock values.

“But there are, of course, many minuses. I think we’re going to have higher interest rates. I think there’s a continuing question about the new regulations on banks. There’s uncertainty over the implementation of the Affordable Care Act. And of course there will always going to be some Washington in-fighting with, of course, the fall elections coming up.

“On net, though this economist thinks it’s going to be a plus. So I do look for the market to be higher at the end of 2014.”