obama

A slightly upbeat note, How the economic crisis will end in 2013?

At a slightly upbeat note, here is how the economic crisis will end in 2013?  In a multi-year forecast from Goldman Sachs economists Jan Hatzius and Sven Jari Stehn: “The US Economy in 2013-2016: Moving Over the Hump”, calls for the economic crisis to end in 2013. 

Not quite amazing, but following 2013, the United states will see growth above 3%. The conclusion is that, 2013 will be the last year of sub-trend growth.

With the rising corporate and household savings, private sector surpluses is the mirror image of public sector deficits.

In conclusion, says Hatzius:

We expect US economic growth to remain below 2% in the first half of 2013. The step-up in the pace of fiscal retrenchment is likely to outweigh the healing in the private sector and the bounce-back from the disruptions associated with Hurricane Sandy. The risk to our forecast is tilted to the downside; a full fiscal cliff outcome would likely result in renewed recession.   … But … growth is likely to improve starting in the second half of 2013.

The key theme of our 2013-2016 economic forecasts is the “great race” between recovery in the private sector and an offsetting contraction in the government sector. … Beyond 2013, however, we see a pickup to an above-trend growth pace as the fiscal drag abates to ½%-1% of GDP. …  the private sector is likely to deliver an impulse of around 1½ percentage points to real GDP growth in 2014-2015. Even with a continued drag from fiscal policy, this should result in solidly above-trend growth of 3% or a bit more. This would still not be a very rapid recovery by the standards of past cycles, but it would be clearly better than the 2%-2½% seen in the recovery so far.

Comment below, what do you think with trillion-dollar deficits, is it a vague optimism or a foggy notion?

Leave a Reply

12 Comments on "A slightly upbeat note, How the economic crisis will end in 2013?"