A mixture of weather patterns and the micro-climate in which a grape grows affects the vintage of any given grape. For example, Shiraz likes it dry and sunny, while sauvignon blanc prefers wet and cool weather.
Combine this with the right micro-climate, and you get oenological bliss. Cross the wires, and all bets are off.
And what of the 2014 vintage for the economy?
Let me make some suggestions.
Well, it is a bit precocious at the moment, but while there are signs of better things to come, it’s hard to say whether you should hold or drink now.
Sure the unemployment rate is coming down fast. In November, it hit 5.8 percent, 1.2 percent below last year. Drink or hold?
Well, at the moment, I’d drink. But the employment-population ratio hasn’t budged more than a half percent in the past four years, and the number of long-term unemployed is still a bit high.
Both the unemployment rate and the number of long-term unemployed will be adversely affected when would-be workers rejoin the labor force – neither of these statistics account for workers who quit looking for work.
Ah, but real gross domestic product grew 5 percent in the third quarter.
Hold. Productivity and nonresidential investment in the U.S. has been reinvigorated this year, with investment growing 8.9 percent in third quarter. This is a sign that firms are gaining confidence and increasing production. This can lead to only greater GDP growth down the road.
Thus far this year, personal income has outpaced inflation, and real incomes are growing as labor productivity improves. This is a double-edged sword, as firms can make more with fewer employees, hence I’m drinking labor markets now.
Residential investment should continue to make progress with interest rates likely to remain low for the foreseeable future. However, complexities in the bank system and lending practices may slow recovery. I’d say drink, but maybe a little immature at the moment.
I’d give the same advice for economic policy.
Fiscal policy seems ready to drink. 2008 was a difficult year, and vintners had to scramble to put together decent varietals. It was a gamble, but it is paying off.
Monetary policy is still a little young, but drinkable. The Fed still sees a somewhat bumpy road ahead, particularly in labor markets, and so seem prepared to keep interest rates low through mid-2015; by then, we should see a return to “normal” Fed policy.
I think 2014 will be a transformational year, one where we’ve learned more about our micro-climate and are figuring out the best grapes to cultivate.
Be sure to join us at 8 a.m. Jan. 7 at the Fort Lewis College Community Concert Hall for the Southwest Business Forum.
firstname.lastname@example.org. Robert “Tino” Sonora is professor of economics at Fort Lewis College and the director of the Office of Business and Economic Research at Fort Lewis College.