JPMorgan Chase economist James Glassman offers a pretty upbeat forecast for 2013:
Private forecasts tend to predict more of the same slow growth in 2013. Many Fed policy makers apparently agree with that prediction.
Instead, the economy is likely to speed up in 2013, to 3 percent or more, and expand even faster in 2014. Many sectors are doing well. The handful of factors that have retarded the recovery are passing into history. The popular financial-speculation-begets-slow story is no longer interesting or useful. Europe’s crisis that stalled the region is under control. The unwind of 2009 US fiscal stimulus initiatives is passing. The real estate nightmare is over. Tail winds from easy Fed policies continue to build.
Near term, the rise in payroll taxes will slow consumers but recoveries from Superstorm Sandy and summer 2012 droughts and the $1.2 trillion of capital gains created by the stock market’s January surge will help. Further out there are many reasons to be hopeful.
Unemployment trends will give clues to the Fed policy outlook for now. The quiet and little-talked-about drop in inflation below the central bank’s 2 percent long-run goal has the final say.
But that’s just the beginning of the good news, according to the above chart (modified by me for clarity) from Glassman. He sees unemployment continuing to improve along with GDP growth that the US hasn’t seen since the fat part of the 1990s. Not only would that boost incomes but would also sharply lower budget deficits. Not exactly Morning in America, but a strong superficial case for a “third term” for Obamanomics.