What to Watch for on The Global Economy in 2015

        Here are some key indicators to signal the health of the global economy in the new year.
        Janet Yellen
        's Big Move
        Federal Reserve Chairwoman Janet Yellen has been laying the groundwork to raise interest rates in the new year for the first time since 2006. Economists have focused on the Fed's June meeting as a possible starting point for rate increases. If she pulls it off, it would signal a long-awaited return to normal for U.S. monetary policy. But the amount, and timing, of the change will be crucial, either rattling or soothing investors.
        Jobs, Jobs, Jobs
        As of November, the U.S. labor market had already notched the best year for job growth since 1999. If that momentum continues for another year the current economic expansion may begin to look like a boom. But for the past five years the economy has given several head fakes, where job growth looked to be achieving real velocity only to falter. And wage growth remains weak.
        Angst in Europe
        Global investors have been unable to rest easy, fearing Europe's debt crisis could flare up again at any moment. Now, the European Central Bank is considering purchasing government bonds to help Europe's economies--just as a new round of uncertainty has emerged around Greece's national elections in January, where a left-wing party challenging the ruling conservatives wants to push back on austerity measures. Spain, too, will hold elections next year amid widespread discontent at the country's 24% unemployment rate. Even Germany, long the eurozone's economic engine, stumbled in 2014 with its economy shrinking 0.1% in the second quarter and growing just 0.1% in the third.
        Abenomics, Part 2
        Japan begins the New Year having approved a $29 billion fiscal stimulus package. The Bank of Japan ratcheted up its monetary stimulus in October by boosting the size of its bond-purchase program. Will the new phase of Prime Minister Shinzo Abe's economic strategy, known as Abenomics, be more successful? The first phase also included massive fiscal and monetary stimulus measures. But Japan's economy still suffered two quarters of declining GDP after a national sales tax increase in April.
        China's Mounting Issues
        After decades of growth averaging 10%, the outlook for China is now threatened by enormous debts taken on to finance infrastructure, an aging population and explosive urbanization. Rebalancing an economy with 1.4 billion people to rely more on consumer spending--what many observers say China needs--is much easier said than done.
        How Now, Dow?
        The Dow Jones Industrial Average recently hit 18000, up more than 170% since the darkest days of 2009. Another record-setting year could swell investment accounts and confidence even further. But if the five-year equity boom proves to be near its end, that could deflate hopes in the broader economy as well.
        Oil Gives--and Takes
        The collapse of petroleum prices has brought cheaper gasoline to consumers, but it could challenge the domestic oil boom that stretches from Texas to North Dakota. The question is whether having fewer paychecks spent at the fuel pump outweighs the downside to the energy industry--such as lower investment in drilling and potential job cuts.
        Josh Zumbrun
        (END) Dow Jones Newswires

        January 01, 2015 17:23 ET (22:23 GMT)

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