The US got a good retail sales number for September today, which portends a decent holiday shopping season. But even this indicator led to forecasters predicting a sluggish 1.6% GDP growth for the third quarter. And with electronics up 4.5% for the month, we could simply be seeing an iPhone 5-generated sugar high.
This slow growth is expected to continue into 2013, which should serve as a reminder that the next President, whether an Obama second term or a Romney first term, will find a stuttering economy for much of their first year.
Economists foresee only tepid growth for the coming year, with unemployment back above 8 percent for the first half of 2013 [...]
The 44 economists surveyed now see gross domestic product — the value of all goods and services produced in the United States — rising just 1.9 percent in 2012 before reaching a 3 percent pace by the fourth quarter of next year.
Employment growth is forecast to weaken. The panel predicts that the unemployment rate will rise to 8.1 percent by the end of the year. The economy should add an average of 125,000 jobs per month during the fourth quarter, down from the economists’ May forecast of 190,000 jobs.
When that rate rises back up – including on November 2, the next jobs survey, delivered four days before the election – could impact the polls.
Basically, the economists report that housing is a bright spot (again, it’s a bright spot for the banks, and most of the price rise can be attributed to a drop of actual homes for sale), while manufacturing will struggle amid a global slowdown, and consumer spending will remain weak.
And of course, there’s the fiscal slope, including the guaranteed drag on growth from the expiration of the payroll tax cut, which should cut 1% from GDP in 2013.
The problem here is that the political class has become so confused about the fiscal slope and its impact for growth that they still seem to think that excessive DEFICITS will cause the slow recovery, when deficits are largely responsible for whatever recovery we’re getting. This is the legacy of a Democratic President who constantly harps on the need to get deficits under control; it’s very easy for the average American to associate the economy with the deficit in counter-productive ways. The whole point of the fiscal cliff is that it would eliminate the deficit too quickly, and crash the economy. You would think this could act as a teachable moment. But instead you have a Republican Presidential nominee criticizing the Democrats for cutting spending, and both parties pointing fingers at each other for cutting defense spending, and yet the true story of deficits and a depressed economy never emerges.