2013 U.S. Economic Forecast: Groundhog Day for the Economy

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Worldwide Economies: The Conference Board’s Forecasts for 2013

Mount Fuji may be beautiful, but Japan’s economic forecasts are anything but pleasing over the foreseeable future. Photo credit: Swollib

The U.S. economy is expected to register another lackluster output in 2013, slightly lower than 2012’s 2.1% increase.

The Conference Board predicts the United States will see its GDP increase by a miniscule 1.8%. Europe will emerge out of recession and post a slight increase of .3%, while Japan’s economy will slow to 1.6%. Other developed nations, once again, will grow at a cumulative average of 2.4%.

Meanwhile, Asia will see the strongest growth, but the pace will decline by about 15%. In fact, world growth as a whole will slow slightly, from 3.2% in 2012 to 3.0% in 2013, according to the Conference Board.

As in Europe and the United States, the areas of the world that are experiencing the most difficulty with sovereign debt will grow the most slowly, not only in 2013 but in future years as well.

The U.S. has not yet adequately addressed its financial problems with austerity measures, allowing it to avoid the recession Europe is now experiencing. A”fiscal cliff” deal — or sequestered spending cuts which take hold due to the failure of political leadership to reach an accord — the resulting reduction in federal spending is likely the reason the Board sees the U.S. economy slowing in 2013. Depending on various factors, it’s even possible that the United States economy could slip back into recession.

Long-term Economic Predictions

The Conference Board sees years of modest growth for Europe and the United States. Even in their most optimistic scenario, the U.S. economy is predicted to grow at an average annual rate of 2.5% for the next six years, less than half the base prediction for China over the same period. Europe and Japan are projected to grow at half the rate of the U.S. over the same period. Furthermore, growth through 2025 remains in the same ranges, although the more advanced economies of Asia are projected to slow further over that period.

Granted, the further out the projections, the less reliable they become. However, one thing is clear: the salad days of the U.S. economic engine appear to be over. In short order, the economy of China will eclipse that of the United States and take over as the world’s largest. Until the American fascination with deficit spending can be structurally solved, the distance between the two countries in terms of growth rate will remain literally and metaphorically far apart.

The phrase Nero fiddled while Rome burned never seemed more apropos.

 Resources

The Conference Board. Global Economic Outlook 2013. (2012). Accessed on December 16, 2012.

Deutsche Bank. World Outlook 2013/14(2012). Accessed on December 16, 2012.

Van Hoffman, Constantine. Return of Europe recession is bad news for U.S. (2012). CBS News. Accessed on December 16, 2012.

Investopedia. Composite Index of Leading Indicators. (2012). Accessed on December 16, 2012.

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