Most government stimulus packages end this year. As of mid-2011 mortgage lending continues to be in disarray and employment, while not double-digit, is above 8%. Oh, and there’s this little thing called a presidential election occurring in November of 2012. And not one of these facts will influence the sustainability of the American economy in 2012.
My thoughts on the economy:
- The American economy will continue to expand with Gross Domestic Product (GDP) near 2% through 2012.
- Unemployment will remain in the 8% range as employees re-tool their skills and baby-boomers defer retirement based on the depth of this most recent recession.
- Residential housing will continue to struggle as the home-ownership rate decreases.
- Housing prices will begin to stabilize in 2013 (or later) only because population growth will begin to out-strip supply.
In 2012 stimulus is behind us and residential mortgage lending will remain tight. Federal Reserve policy does not affect employment and the presidential election is towards the end of the year. Where do we find guidance, reliable guidance about the course of the American economy?
Start with Facts, Economic Facts
Is economics science or social science? Is it a predictor of future outcomes or just a crystal ball? In my view it is science with a layer of human psychology.
Whereas Google may employ the top technology brains in the world, it’s the gaming industry that has high-powered psychologist on staff. Surprised? Who better to predict how to part the un-wary gambler from their money?
Back to economics. There is not a single large bank without a Chief Economist. Part of their job is to predict economic behavior in markets, sometime by region or country. They influence the decision-making of executives charged with guiding the investment criterion of the bank’s capital and that of it’s clients. Often, a single event will require these economist to modify their predictions (changes in Egypt, the BP oil spill in the gulf).
Hark! If this is science, how is it that words utilized to describe it include behavior, influence and predictions? Why not use words like outcomes, correlation and results? Because the outcomes, correlations and results are all based on behavior, influence and predictions.
Who Has Real Facts? Economic Facts
So who should we listen to? Which sooth-Sayers have standing? Following are sources of economic data that avoid providing “middle-of-the-road”, data goop (data goop: information with no defining use).
Each of the following has a deep and meaningful institutional knowledge base with roots in the science of economics. These sources can assist you in building your own predictions and forecast.
Bloomberg Survey of Economist. The Survey provides a collective prediction of data points of valuable and consistent insight on the direction of the overall U.S. economy. http://bloomberg.com
International Monetary Fund. This world body is not without it’s internal politics. But there is no doubt they provide reporting accomplished by big brains with deep knowledge and experience within their specialties. http://www.imf.org/external/index.htm
The International Monetary Fund predicts growth in the world economy will accelerate to 4.5 percent in 2012 from 4.4 percent this year. While advanced economies will expand 2.4 percent this year, developing nations will grow 6.5 percent, driven by expansions in China and India, the IMF predicts. Bloomberg Reporters: Stephen Treloar and Josiane Kremer, May 13, 2011.
Bureau of Labor Statistics. This agency is more government issue than U.S. greenbacks. They are tattooed with facts about the American labor market. I believe them to be reliable reporters providing quality information about the U.S. economy. http://www.bls.gov/
Certainly, there are other sources with quality information. May I suggest starting here towards building your own list of quality sources of economic information.
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