Don't Worry -- Be Happy ... Better Economic Times Ahead in 2013 and Beyond

Let's skip the gloom and doom and talk about something positive for a change. After all, it's the holiday season and I for one am tired of hearing about all the horrible things that MAY happen to our country and economy. Let's instead focus on what good things are likely to happen shortly. By early in 2013, as a matter of fact.

The U.S. economy will probably only grow at the rate of 2.5% in 2013. But at least it will grow.

Inflation will remain low and that means interest rates will stay at extremely low levels as well.

But low growth isn't the same as no growth and the direction is headed up now. That should be the case for the next several years, and during that timeframe unemployment will slowly work its way down to 6% or so.

While not great, there's steady improvement on the horizon and as far as the eye can see.

Economies throughout the world, ours included, have experienced very difficult times these past few years. Growth has been slow at best, and unemployment has been stuck at high levels. And the political noise and uncertainty surrounding our 2012 national elections occupied a great deal of our time and attention as well.

And if that wasn't enough to destroy consumer confidence, now we're witnessing the political silly season all over again as the two political parties go back and forth about who will bear the greater responsibility if we go over the fiscal cliff at year end. Then they can point fingers at each other about the next danger of exceeding the national debt ceiling shortly thereafter.

I don't believe either of these completely unnecessary events will take place, but we can't know for sure. Our politics is just plain nuts.

But there is at least one good news thing that I do know. Although this Friday's unemployment numbers may appear scary at first due to Sandy, it's no time to get discouraged. The worst is over or soon will be.

And here's why. The noise surrounding the current fiscal cliff and debt ceiling discussions will be behind us soon, and then we can get on with the serious business of repairing our economy.

In that regard, three things should assure us that 2013 will be much better for We the People than recent years have been: (1) The U.S. housing debacle of the past several years is over as both home sales and prices are increasing; (2) Many European economies look like they've bottomed, are stabilizing, and may soon be improving; and (3) the uncertainty surrounding the fiscal cliff, our national debt ceiling, taxes and government spending will at long last be in the rear view mirror.

So don't despair, my fellow Americans. Better days certainly lie ahead. And these better days should last at least until the end of the decade. It's about time something good happened.

Jobs Picture Should Brighten in 2013 points out some specifics:

"Plenty of dark clouds loom over the U.S. job market—particularly the potential double-punch of tax increases and spending cuts known as the fiscal cliff.

But if the U.S. can avert that Washington-made crisis, the outlook for workers finding jobs is actually looking pretty good for next year. For one thing, the damage of superstorm Sandy will have to be repaired, meaning jobs in construction and retail. Businesses, meanwhile, which have held off investing and hiring because of uncertainty over the fiscal outlook, might finally open their wallets. That means more jobs, too.

Employers have stepped up their hiring recently, adding 171,000 jobs in October and an average of 157,000 a month so far this year. That's a better pace than last year and the strongest job growth since 2006, Labor Department data show.

Of course, the recovery of the job market has been, and probably will remain, incremental. Job growth needs to be much stronger to actually make a big dent in unemployment, which remains high at 7.9%, though down from 10% three years ago.

The government's next snapshot of the job market, due Friday, will be distorted by Sandy, which devastated the Northeast in late October, leaving many jobless. Economists say Sandy could temporarily knock anywhere from 100,000 to 150,000 off of the government's jobs tally for November, resulting in job growth of under 100,000 or even much less.

But economists generally expect the momentum of the recent past to resume and continue once storm distortions abate. The 45 economists who responded to The Wall Street Journal's latest monthly forecasting survey saw the jobless rate falling to 7.8% by next June and 7.5% by the end of 2013. Some say job growth could accelerate from its slow pace. . . .
 

Four factors should fuel the jobs recovery in 2013:

Housing is finally recovering. Home values are up 7% nationally through the first nine months of 2012, according to the S&P/Case-Shiller index. Meanwhile, home-building is gaining traction, which means more jobs for construction workers, contractors and builders. . . . It's not just construction crews. Retailers who cater to Americans furnishing, repairing and improving their homes also will need to hire.

Federal, state and local government job cutbacks are slowing. More than 250,000 workers at all levels of government lost jobs last year. This year, so far, about 20,000 have gained jobs. Worries about the nation's debt and deficits likely will keep a lid on government spending and investments, economists say, but any jumps in, say, infrastructure spending would create jobs. At the least, government will be less of a drag.

Consumers are feeling better. Consumer confidence is at the highest level in four years, thanks to improvements in jobs, housing and the stock market. In the wake of the recession, Americans whittled down their debts, avoided borrowing and delayed purchases. That means the stage could be set for stronger consumer demand, which could nudge businesses that have put off hiring to add more workers. . . .

Manufacturing and sectors like leisure and hospitality should keep creating jobs. America's factories drove the early part of the U.S. recovery and, although growth has slowed, they should continue to add workers selectively. After adding about 9,000 jobs a month in 2010, manufacturing has added about 16,000 jobs a month so far this year. Slowdowns in Europe, Japan and fast-growing China have hurt global trade flows. But lately, more corporate executives are realizing that making things in the U.S. has benefits over, say, China. Meanwhile, the leisure sector, including restaurants, has been a reliable source of job growth all year.

The job market faces challenges. Some five million Americans have been out of work for six months, raising the risk their skills will erode and make it even harder for them to find jobs down the road.

And fears of slowing revenue growth could keep a lid on hiring by companies. . . .

Still, the optimistic view is that several roadblocks to recovery—an over-indebted consumer, a moribund housing market and shellshocked banks—are no longer holding back hiring. Barring an unforeseen shock to the economy, this could mean 2013 will be another year of slow but steady growth."

Summing Up

Although no economic boom is in sight, the worldwide bust looks like it's in the past.

Barring something real stupid coming out of Washington or Europe, it definitely looks like the worst is over and a long lasting, albeit slowly unfolding, expansion lies ahead.

And after establishing a firm foundation by the end of 2013, gradual economic improvements will continue through the decade.

At least that's what my crystal ball sees.

There will be lots of bumps in the road and trouble spots galore, for sure, but nothing that will stop a solid economic expansion is on the radar screen.

So get ready for better days just around the corner. 

That's what I'm doing.

Thanks. Bob.