Counterparties: 2013 — The year of meh
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The NYT and the WSJ have officially weighed in on the US economy in 2013, and the sound they’re making is something of a collective meh.
The NYT says things will be “pretty good next year — assuming Washington does its part”. The WSJ is barely more positive, saying next year will be a “more normal, though hardly robust, period of growth”. (Both pieces focus on economic growth, rather than the much more pressing problem of unemployment.)
Economists think that growth above 3% next year is as equally likely as a recession — they’re both given 24% odds, according to a WSJ survey. In a separate survey by NABE, economists predict GDP will grow by just 2.1% in 2013, after 2.2% growth in 2012. NABE respondents predict “little improvement” in consumption, and slowing corporate profit growth, and slowing spending on equipment and software.
The 2013 outlook isn’t pretty, but it’s not terribly frightening either — unless you’re one of the 12 million officially unemployed Americans. Hale Stewart points to some bright spots, not the least of which is that consumer debt is nearing a 30-year low. Consumer confidence and auto sales are solidly back in pre-recession territory, and there’s more and more evidence of a housing market rebound. Bill McBride, for his part, is on the “modest” growth 2013 team, but he identifies two big upsides for next year: residential investment is rising, suggesting construction employment will soon follow, and state and local governments have largely stopped slashing jobs.
Which brings us back to the Very Big If in 2013. The WSJ reports that fiscal cliff negotiations may have finally hit a “breakthrough” “tipping point” when the GOP agreed to higher taxes for millionaires. That’s certainly a good thing because Goldman’s star economist predicts that, even with a fiscal deal, we’ll see some degree of budget austerity early next year.
And while we’re hoping for a fiscal cliff deal, let’s hope economists’ forecasting ability improves. Zero Hedge notes that since 2003 economists have, on the whole, overestimated US GDP by 10.6%. — Ryan McCarthy
On to today’s links: