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Slow Growth Forecast For the U.S. in 2013

Blog Dec 13, 2012

When all is said and done and the bean counters have sufficiently reviewed 2012, and the Slow Growth Forecast rate for the U.S. GDP will probably come in around 2%. As weak as a 2% growth rate sounds, and it is weak, it is better than what is expected in Europe. The Euro-zone forecast for 2013 is zero percent.

We live in an economically dependent world and any unfortunate turn of events in any global economy will have a negative effect on the other world financial systems. The U.K. is in danger of a triple dip recession and here in the U.S. there are repeated calls that a new recession is just around the corner. Indeed the repeated calls by ECRI (Economic Cycle Research Institute) that we are already in a recession (as of July of 2012) has for the most part fallen on deaf ears. In contrast to Europe’s gloomy outlook, China and India have been shining examples to the world in terms of growth, and are expected to continue growing their economies in 2013. However, the staggering rate of growth these two economies enjoyed over the past five years is widely viewed as a thing of the past.

The challenges we face today in the United States are high unemployment and a high magnitude of Federal debt. The Federal debt is something both political parties have been growing since the end of World War II. The solutions will take time and require enduring some “pain” that will probably include lowering spending and increasing taxes. Remember that pain when some politician suggests some version of a “something for nothing” program. Most people want to raise taxes on the other guy, but if we are serious about addressing the problem we all created, taxes will need to be fairly distributed amongst all individuals and corporations.

One of the problems is that small business in the United States, long recognized as the engine of prosperity in this country, can not adequately judge risk as we go forward. Additionally, an increase in taxes will have an adverse reaction on economic growth, as the greater the amount of taxes the government takes in, the less there is for us to spend.

One of the solutions for our gigantic debt that we now carry around with us is to inflate it away. This is, of course, an immoral solution to an immoral problem of living beyond our means and expecting someone else will pick up the tab for us, be it China, Japan or Russia. There is little that can be done by the man on the street to guard against this eventuality, short of taking note of the coming economic storms and trade flimsy Fed dollars for something with intrinsic value, perhaps gold, in this economic slow growth forecast.

Thumbnail Photo We believe that everyone deserves a properly developed strategy for financial safety.

Lynette Zang

Chief Market Analyst, ITM Trading

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