By Phillip M. Perry
Overcast with clearing skies — That’s the economic forecast from a major research firm as retailers enter a new year. Drizzly conditions will remain at least for the first half of 2013 as consumers hold tight to their pocketbooks. By the summer, though, light should break through the clouds as the resolutions of critical national uncertainties encourage corporate hiring, capital investment and consumer spending.
The coming year as a whole is not expected to bring significant relief over 2012.
“We expect the recovery to remain lackluster,” said Sophia Koropeckyj, managing director of industry economics at Moody’s Analytics, a research firm based in West Chester, Pa. (economy.com). “The pace of growth will be too slow to meaningfully bring the unemployment rate below 8%.”
The numbers tell the tale. Moody’s expects GDP to increase by 2.4% in 2013. That’s not much of an improvement over the 2.3% anticipated for 2012 when figures are finally tallied.
Moody’s forecast might not seem all that bad, given that the GDP increase for an economy in average growth mode is 2.5%. However, a nation recovering from a recession needs a more robust expansion.
“By most measures, this recovery is among the weakest in the past 50 years,” said Koropeckyj.
What’s holding things back? Koropeckyj points to a number of areas:
“Fiscal restraint on the local and national level, weaker global demand, a housing market that has hit bottom but has a long way to go to become healthy, and weak income growth are all constraining a stronger pickup in employment.”
Other factors are the weakening economies of China and Europe — both important export markets.
All those factors are coming together to subdue the public mood.
“Consumer confidence is still at a level consistent with a recession,” said Scott Hoyt, Moody’s senior director of consumer economics. “Consumers remain concerned about economic conditions. There is still high unemployment, weak growth in wages, volatile stocks and high gasoline prices. There are a lot of thin