What to Expect in Financial News in 2014

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The economy and the thousands of components that go into it — interest rates, unemployment, government spending, foreign trade, stock markets, start-ups and shutdowns — will be in the news every day in 2014 because we all want to know if we’re going to be better or worse off than last year.

Hopefully, better.

How that plays out will be determined by things we can control like work habits, personal spending, personal saving, education, willingness to change, and things we can’t control like Obamacare, debt reduction, military spending and the debt ceiling. Oh yes, there is also the matter of whether China and Japan turn a feud over some uninhabited islands into something nasty that will be much worse for everyone in the global economy.

With that in mind, here are five things that will continue to make some news in 2014:

1. How Do I Get My Hands on a Bitcoin?

It’s hard to say whether the fad money of 2013 will become a legitimate form of currency in 2014, but it certainly bears watching. China, the world’s second-largest economy, already has said no to Bitcoins, banning companies from using them for business transactions. Still, there are a lot of companies in countries all over the world ready to accept some of the 12.2 million Bitcoins in circulation. The alleged value of Bitcoins soared from $10 to more than $1,200 and back to somewhere around $500 in 2013. No one ever clearly answered what the value was based on and how an economy can function when the market price for the currency changes 10 percent to 20 percent in a day. That is why we’re skeptical about the future of Bitcoins, but a virtual currency has to happen someday, doesn’t it?

2. Give Them Credit

Americans are getting comfortable again with having multiple credit cards and using them to buy anything and everything. Credit card usage is up again after declining dramatically from 496 million open accounts in 2008 to 378 million in 2010. The number jumped back up to 391 million in 2013, and the card companies are laying out incentives to keep that number – and the debt associated with it – moving forward. Enticements included no interest charged the first year, no fees and cash back rewards, bonus mileage points for frequent flyers, cash back on groceries and gas and many more. Consumer debt from credit cards reached $672 billion — still far below the record of $866 billion in 2008 — but the number has been trending upward over the last two years, and no one seems concerned about the mess we got into with credit cards five years ago.

3. More Jobs and Higher Wages

That constant dripping noise you hear is the unemployment rate slowly being reduced from 10 percent in October 2009 to 7 percent in November 2013. The fact that it’s dripping — and not flat-out dropping — tells you that businesses still are not all that confident about adding a lot of new jobs to a recovering economy. About 200,000 jobs a month were created in 2013, not nearly enough to accommodate all the graduates, who want to work off some of their student loan debt. Those who do land a job, mostly fall in low-paying service industry work. Minimum-wage earners are trying to unionize because wages are not high enough to sustain a family, unless they receive government assistance. Nobody likes that scenario, but it’s real and growing.  More jobs vs. higher pay will be a story to watch in 2014.

4. Shop from Your Desktop

The most obvious feedback from the 2013 holiday season is that the day is quickly coming when Americans choose to sit in front of a computer and shop at home rather than get behind the wheel and drive to a store. Online sales exceeded $1 billion for the first time Thanksgiving Day and rocketed to $2.29 billion on Cyber Monday. Amazon sold 36.8 million products on Cyber Monday — 426 items per second! – and sales jumped 46 percent. Sales at eBay.com were up 30 percent. Even Walmart, the granddaddy of brick-and-mortar, admitted that it reached online sales record that day. The final numbers for last-minute online shopping aren’t in yet, but the fact that UPS delivery system collapsed under the weight of hundreds of millions of orders, should shout to retailers to stop building stores and start building web pages.

5. How Much Money Was Made on Wall Street?

Warren Buffett made $37 million a day in 2013. Jeff Bezos, CEO of Amazon, made $11.3 billion. Bill Gates is now worth $72.6 billion, after making $11.5 billion on investments in 2013. You and I didn’t make anywhere near that much, but if we invested in any of the major stock indexes, like Dow Jones, Nasdaq or S&P 500, we should have made something. Stocks on the Dow Jones hit record highs 52 times in 2013, gaining 3,638.55 points — up 28.1 percent. The S&P 500 also set records almost every week, hitting record highs 45 times in 2013. For the year, the S&P gained 445.93 points and was up 31.8 percent. The Nasdaq still can’t catch its record high of 5,132.52 set in 2000, but it’s closing in. Nasdaq finished 2013 at 4,176.59, a 41.1 percent gain.

Can they do it again in 2014? That depends on whether investors pour all the money they made in 2013 back into the market in 2014? Will the Fed keep interest rates at record lows? Will Congress made a significant move to deal with the budget deficit or debt limit? Will Obamacare turn the insurance or medical professions upside down?

Stay tuned. We’ll let you know in 2014.



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