Is the US economy poised to make a major comeback in 2013?

[techs]

I believe it is.
If Europe can gets its head out of its ass and just do what they have to do, basically provide economic aid to the countries on the verge of default, and end the ruinous austerity in other countries, it will have a huge impact on the US.

The US economy had turned around up till the European problems. The possible bankruptcy of places like Greece scared American banks and businesses. So they do what they always do when there is uncertainly. They hold off on spending and purchases.

There are a few things that could derail the recovery. One would be a Tea Party attempt to stop the raising of the debt ceiling. If US businesses even think there is a possibility of this it will add so much uncertainty that businesses will stay in their austerity mode.

Another thing that could derail the recovery would be a dramatic reduction in US government spending. We have already seen the huge drop in employment due to layoffs by State and Local government. If their were even a 500 billion dollar drop in spending we would probably see 12-14 percent unemployment and some states go bankrupt.

So, basically if the US follows a responsible course thru the end of 2013 I think we could see a very big rebound.

 

[God Mode]

No comeback but a further polarization from obsenely wealthy to working class masking GDP and other BS markers of economic health.

Continued yet managable decreases in living standards and luxuries for the middle class and below. Property and commerce increasingly purchased and controlled by the elite classes. Nothing will change for the most of us except a slightly decreased rate of rape of our individual economic freedom.

 

[Bitek]

as much as I wish to agree with you, I don't see that happening. What I do think we will see is basically a flatline on growth like we're saying now. And that is with obama winning reelection.

If romney and tea party make the gains and savage the budget, a recession is a very real possibility. Basically they want to do Europe on steroids.

I don't really see anything that will increase growth even with Europe improving (by some miracle.) most likely scenario is to be in the doldrums for several more years.

 

[nehalem256]

Of course! The Republicans have spent the last few years fining tuning their control over the economy (they do not want a repeat of the economy collapsing a few months before letting a Democrat become President), and as soon as Romney is sworn in the economy will shoot up!

 

[Matt1970]

We can keep borrowing to artificially prop up GDP. We pay 10% of our total tax revenue on interest alone with an astronomically low interest rate. What about when it’s 15%? 20%? 25%?

 

[piasabird]

Every time we borrow morre money it takes more taxes and longer just to pay the debt. Another 10 years and the debt payment alone will be almost a trillion. However, if we change leadership we might be able to turn things around. During Clinton's presidency for a short while we just about had a surplus on paper anyway. It was also during that time we started playing games with the budget. A lot of items were taken off-budget making the actual costs hard to track. If we could just get the world economy and ours to recover a little things might turn around.

Normally I would say free trade is a good idea. But over the years I have considered this thing that we call free trade to be a big lie. We should have free trade with only countries that are free. It should not apply to countries that are highly socialized that repossess businesses on a whim or operate a Communist society. It should not apply to locations where they artificially keep labor costs low by harassing their own labor force either. These kind of countries are not really free and dont care about our values or law. Therefore we should deal with them as if they were enemies of our state in a controlled and careful manner. Countries like China, Russia, and even Mexico should not ever be granted our highest favored nation trading status. After Mexican president said it contaminated goods were not coming from Mexico we should have stopped importing food from them. After china had toys contaminated with lead and food contaminated with melamime we should have stopped trading with them. It is not safe to trade with china at all. We should only trade with equals on an equal basis. Everyone else should get only limited trades when congress approves them. There is no reason for the USA to prop up communists and countries that want to kill us all.

The USA might have to internalize to some degree to survive in the sour world economy.

 

[dmcowen674]

Is the US economy poised to make a major comeback in 2013?

No

Last I checked we have not brought back significant manufacturing.

We still don't have our own smelters anymore and can't build our own bridge and skyscrapers anymore without importing steel from China.

Because of this we are only a partially sovereign country at this point.

Have a long way to go to be wholly sovereign again.

 

[Infohawk]

The US economy had turned around up till the European problems.

Not really. The stock market has been better but there have been big problems with the labor market for four years now.

 

[epidemis]

Leading indicators say no - what are you basing your opinion on?

 

[techs]

Leading indicators say no - what are you basing your opinion on?

Pent up demand and backed up business purchases.

 

[Smoblikat]

I believe it is.
If Europe can gets its head out of its ass and just do what they have to do, basically provide economic aid to the countries on the verge of default, and end the ruinous austerity in other countries, it will have a huge impact on the US.

The US economy had turned around up till the European problems. The possible bankruptcy of places like Greece scared American banks and businesses. So they do what they always do when there is uncertainly. They hold off on spending and purchases.

There are a few things that could derail the recovery. One would be a Tea Party attempt to stop the raising of the debt ceiling. If US businesses even think there is a possibility of this it will add so much uncertainty that businesses will stay in their austerity mode.

Another thing that could derail the recovery would be a dramatic reduction in US government spending. We have already seen the huge drop in employment due to layoffs by State and Local government. If their were even a 500 billion dollar drop in spending we would probably see 12-14 percent unemployment and some states go bankrupt.

So, basically if the US follows a responsible course thru the end of 2013 I think we could see a very big rebound.

Where will the money come from? If they have to give money to those who are clearly unable to handle their own money where willl the money come from? Tax payers?

 

[Engineer]

Until there is some sort of revolution in middle class jobs (solid, wealth building jobs - not retail service jobs), no.

The race to the bottom is a slow, grueling one.

 

[sandorski]

I doubt Europe(Germany mostly) can get its' head out of its' ass. They are so focused on doing the opposite of what needs to be done that it seems impossible for them to fix anything.

 

[mshan]

Last summer, when Greece was just starting to get on our tv screens, I remember reading reader comments at London Banker blog website about how they (Europeans) were in better fiscal condition than U. S. and how you don't solve a debt crisis with more debt.

I think their original plan was 5 years of harsh austerity to get their debt loads back to sustainable levels, but the financial markets wouldn't let them. Greece was never going to be able to pay off it's debts (just a matter of when formal default occurs), Spain I think initially seemed like it could be solved with growth, but now may become another Greece (can't pay and PSI / bond subordination and / or OSI), Italy is a very wealthy country that has the resources to solve it's problems, just not the political will.

Seems like they've been reluctantly doing just enough to avert the crisis immediately at hand, then trying to kick the can down the road further till the next immediate crisis that they can't punt presents itself to them.

My sense is that Germany is now trying to do some sort of Japanification of profligate European members for about 5 years as the least worst and least costly to them solution, if the financial and bond markets would let them.

Not sure if Germany wants to reluctantly do Japan style quantitative easing vs. Bernanke's much more expansionary vision of the same: http://youtu.be/a-R8qpea6lc and

"But you need to notice that the Japanese bank collapse looked very different from what is going on in America now.

The Japanese bank collapse was not a collapse of funding – it was a collapse of asset values and solvency.

American financial institutions are now having wholesale funding runs (or finding wholesale funding is unavailable which amounts to the same thing). Japanese financial institutions did not need wholesale funding (most had deposits) and hence by-and-large did not have runs. [There were some institutions such as the long-term-credit banks and similar institutions which had wholesale funding – they were effectively nationalised."

...


"Insolvent but liquid banks are the key to understanding Japanese interest rate policy. There are several prominent macroeconomists in America (led notably by Krugman but joined by Bernanke) who argue that the zero interest rate policy was insufficiently expansionary – and that monetary policy should have been eased until it induced inflation*. In theory this could be done by flying a helicopter over Tokyo throwing out freshly printed 5 thousand yen notes. Indeed it was in a speech about Japan that Bernanke uttered the famous helicopter line."


http://brontecapital.blogspot.com/2008/07/deflation-and-bank-bailouts-in-japan.html

* "The biggest paradox is that as the US financial system takes more and more steps back, and reverts to a more conventional system (look at Europe as a paradigm of what is coming), the risk that incremental money creation by the Fed will eventually spur inflation rises exponentially, as more and more "money" ends up residing within conventional bank deposit accounts.

That currently there are just shy of $10 trillion give or take in consolidated deposits across the US financial system, on total liabilities of $30 trillion, is the only reason why the Fed has still be unable to spawn the kind of "virtuous" inflation that Bernanke dreams about every night but is unable to create.

Said inflation buffer, however, is getting smaller and smaller every quarter, and at this rate, shadow banking as a transformational conduit will completely disappear in a few short years, at which point everything will be in the hands of fickle depositors.

It is then, that America will finally figure out why Germany and the Bundesbank, are so leery of runaway printing. Because while the US still has the benefit of shadow liabilities, Europe does not. And Schauble, Merkel, and Weidmann, not to mention the German population (at least subconsciously) all know this"


http://www.zerohedge.com/news/verge-historic-inversion-shadow-banking

Inflation in U. S. is already trending down from his 2% target, so if this deflationary shockwave emanating out of Europe spreads to U. S., perhaps that is the trigger for QE3 (Bernanke previously said QE2 was instituted to combat incipient deflation he saw in U. S. at that time).

U. S. consumer apparently still has 2 more years to delever from credit bubble, so seems like real economic boom might be more of a 2014 type thing. Stock market could boom much earlier just because a lot of uncertainty is removed from market, and at least in relation to central bank manipulated artificially low interest rates, stocks are incredibly cheap. On a more absolute basis, comments iIve seen on tv seem to indicate stock market right around here (1350 - 1375) is not expensive as a whole, but it is also not cheap either.

 

[woodie1]

Is the US economy poised to make a major comeback in 2013?

Nope. We'll be lucky to keep things as they are.

 

[Pr0d1gy]

Yes it is. Many people such as myself are going to be buying homes again in 2013, not to mention all the new furniture, home theater gear, and PC that I will need to fill the house out in new hotness.

 

[Farang]

Yes. I think Obama will win re-election. This will allow a debt deal, as a second term President is a lot more "flexible" and can make the bold, unpopular steps necessary. A deal will take any worries about the U.S. government out of anyone's mind and things will go full speed ahead.

 

[GrGr]

How can the US make a comeback when the debt is growing by 9% on a yearly basis? The US is $15 trillion in debt today. If the debt keeps growing by 9 % on a yearly basis by 2020 that will be $30 trillion. In 2028 it will be $60 trillion, in 2036 $120 trillion. By this point what kind of society do you think you will live in?

$240 trillion debt in 2044
$480 trillion by 2052
$960 trillion by 2060
$1.920 trillion by 2069
$3.849 trillion by 2077

Frankly, there will be no recovery until the US gets it's finances in order. And that will simply not happen.

And with this debt bubble exploding in your faces you have lunatic Presidential candidates talking about tax cuts...

You are completely nuts.

 

[a777pilot]

Is the US economy poised to make a major comeback in 2013?

In a word .... YES!

All that is needed is a leader that can see it and that has the guts to push it. That would not be the current Fool, Bobo, the Post Turtle.

 

[GrGr]

Is the US economy poised to make a major comeback in 2013?

In a word .... YES!

All that is needed is a leader that can see it and that has the guts to push it. That would not be the current Fool, Bobo, the Post Turtle.

And how would this miracle take place? What exactly would the New Dear Leader push?

 

[Dulanic]

Is the US economy poised to make a major comeback in 2013?

In a word .... YES!

All that is needed is a leader that can see it and that has the guts to push it. That would not be the current Fool, Bobo, the Post Turtle.

It doesn't matter who is driving the car when your tires are being slashed. There is 0 chance we truly improve anytime soon whether we have a D or R president. And improve doesn't mean lower unemployment by filling jobs by underemploying people.

 

[GrGr]

Yes. I think Obama will win re-election. This will allow a debt deal, as a second term President is a lot more "flexible" and can make the bold, unpopular steps necessary. A deal will take any worries about the U.S. government out of anyone's mind and things will go full speed ahead.

Those 'bold, unpopular' moves have to be to slash the military budget with 50 %. You simply cannot go on paying 55% of every tax dollar into the war budgets, pay 10% to service debt and believe you can live on what little remains.

US Congress doesn't even bother making budgets anymore. The Fed is both printing money to feed the holes (QE) and buying debt instruments from the Treasury. This fun jerking off economic system can last a little while but not in the long run.

 

[Jaskalas]

Inflation in U. S. is already trending down...

Let me know when food prices fall.

 

[a777pilot]

And how would this miracle take place? What exactly would the New Dear Leader push?

First I would start my turning the oil production loose. I would start to build nuclear power plants. I would turn to coal and natural gas industries loose.

I would have a tax holiday on all funds returned to the USA.

I would lower taxes on businesses and more importantly I would reduce greatly the regulations that are killing small businesses.

I would get rid of BoboCare and replace it with a national goal to greatly increase the number of doctors and health care professional.

I would have tort reform.

There that is enough to get the future started.

 

[Gonad the Barbarian]

How can the US make a comeback when the debt is growing by 9% on a yearly basis?

Because government debt isn't holding back our economy. You're perpetuating a myth, either knowingly or not.