2012: A Brighter Economic Outlook?



…Or the end of the world as we know it?

I am not an economic forecaster of any kind. I have no access to economic data other than what is reported. Truth of the matter is that the “data” economists analyze is much like the Doppler weather data. It’s good for telling you the weather yesterday and today, but has marginal value for the weather next week.

So with that caveat, here’s my economic forecast for 2012: Partly Cloudy. I guess that’s better than 2009 which was rainy all year.

There are small signs that we may be moving forward. It starts with jobs, a real indicator of economic health. Joblessness is declining slowly. The unemployment rate of 8.6% is the lowest since 2009 and hopefully will trend marginally downward this year to the lower 8s. The number of people applying for unemployment has dropped to the lowest levels in almost 4 years. However it’s important to know that there’s a large segment of the population that is “underemployed” working in positions at lesser pay than their previous one and/or working part-time when full time work is desired. Also there’s a segment, whose size is not fully understood, which has given up seeking employment altogether.

On a broader perspective, I believe we have reason to worry about world economic conditions, as they are not unrelated  issues without any impact on us. We are a domino in the world economy, albeit a large one, but when other dominoes fall, it impacts us too. The instability of the European economy surely impacts us as well.

As an American public we have gotten wiser about our previous habits of spending beyond our means. Buying on credit has fallen during this Recession (which continues regardless of any economic definitions of what a Recession is). Loans, both business and personal, are far more difficult to obtain. Virtually everyone is “tightening their belts” in ways large and small. Frugality is not evil, in fact it is to be admired;however, lesser spending by the American public stymies an economic rebound.

We are also far less mobile than ever.  Census Bureau’s Current Population Survey of March 2011 paints a picture of the least amount of mobility since World War II, with only 11.6% of the nation’s population moving to a new home in the last year. This is a dramatic decline over the past 25 years from the 80’s – during which almost 20% of the nation moved. Obviously the pain in the real estate market has a major impact here. Young adults are staying home longer, and marrying later. And seniors and aging Baby Boomers are staying put and not moving to Florida & Arizona as they might have in the past.

The past 3 years have been a readjustment of expectations and no one is expecting a rosy future in short term. Marginal improvement, “partly cloudy”, is probably the best we can hope for. So my hope is that 2012 will be a turning point for our economy with brighter years in the future. Then again there are those which say that December 12, 2012 will be the end of the world. If so, I surely pray that the Yankees will win their 28th and final Championship in late October. Always best to go out as a winner. If the Yankees win again for the final World Championship, and it truly is the end of the world as we know it, I will feel fine.

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One Comment

  1. Beth Strum says:

    Lonny, you make the current economic “climate” understandable.

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