It's not exactly Downton Abbey, but the global economy in 2015 is already shaping up in the minds of many observers as a tale of contrasting fortunes.
The consensus view is that the United States and Canada will enjoy decent growth, but other regions will struggle.
Over the next few days, a flood of economic reports will put that view to the test.
The first full week of the new year will provide readings on the employment situation in both Canada and the United States, as well as the minutes from the latest Federal Reserve meeting, and inflation data from Europe and China. The economic data, of course, will refer to December, but they'll still provide a good sense of how the global economic picture is shaping up as we enter 2015.
In Canada, where jobs numbers will be published Friday, economists expect net employment rose by about 10,000 in December. The likely increase will be on top of 190,000 jobs already created in 2014, according to the Bank of Nova Scotia. All in all, that marks a big improvement from 2013, when only 99,000 positions were created.
For now, however, most measures of wage growth remain soft. Average hourly earnings of permanent workers grew only 1.6 per cent year-over-year in November, suggesting that there may still be considerable slack in the labour market.
In the U.S., the payrolls report on Friday is likely to show a gain of about 275,000 jobs in December, according to the Scotiabank economists. That would result in about 2.9 million new jobs for the year as a whole and make 2014 the strongest year for job creation since 1998.
While falling oil prices may slow the hiring spree in areas such as Texas, North and South Dakota and Montana, those oil-rich states have played a much smaller role than many people think in driving employment growth since the financial crisis, according to the bank economists. "What we're assuming is that job growth will remain resilient as lower oil prices ignite additional hiring in other sectors of the economy," they say.
The larger question, of course, is whether the U.S. economy can finally get up a full head of steam in 2015. Its fastest full-year growth since the financial crisis was 2.5 per cent in 2010 – a respectable but less than inspiring result to those of us used to thinking of 3-per-cent growth as normal. While 2014 had its high points (such as the third quarter, when GDP expanded at a 5-per-cent annual clip), growth for the entire year is expected to tick in at only 2.4 per cent, according to the economics blog Calculated Risk.
The slow-motion U.S. recovery reflects a sluggish housing recovery, a turn to austerity by state and local governments, and consumers who were focused more on paying down debt than spending money on new purchases.
At long last, all of those restraints appear to be easing their grip.
However, hopes for vigorous growth have to face the reality of an aging population. Calculated Risk estimates that the prime working age population in the United States (those between 25 and 54 years of age) grew 2.2 per cent a year in the 1980s, 1.3 per cent a year in the 1990s, and actually declined slightly in the decade that followed, before staging a modest rebound.
"All told, the work force is growing nearly a full percentage point slower than it was in the 1990s, and this is why 2 per cent growth is the new 3 per cent," Justin Wolfers, a professor of economics at the University of Michigan, wrote recently.
One threat to North American growth will be the less than impressive outlook for Europe. Preliminary estimates for German and Italian inflation will be released this week and it's likely they will show a continued trend toward disinflation.
Prices in the euro zone as a whole are verging on outright deflation as the continent continues to search for ways to restart its economic growth. Meanwhile, a Greek election slated for Jan. 25 could bring to power a new government that wants to renegotiate the country's bailout agreement – a development that could once again thrust the currency bloc into crisis.
China, too, will release December inflation data this week. Consumer inflation has been ticking lower in recent months while producer prices are already shrinking. While part of this trend to lower prices is the result of lower oil prices, it also reflects the large amounts of industrial overcapacity in the Chinese economy.
Slowing growth in China and Europe will make it a challenge for North American exporters to expand their sales in 2015. But Canada and the U.S. still loom as two of the brightest spots in an uninspiring world economy.