Here’s a fairly safe bet for uncertain times: the U.S. economy will once again show the euro zone and Japan a clean pair of heels next year.
Forecasts for 2013 that are now landing thick and fast show Federal Reserve chairman Ben Bernanke is not alone in believing it could be a very good year for America if politicians can avoid tumbling off the so-called fiscal cliff.
Updated gross domestic product figures due on Thursday are likely to show the U.S. economy was already doing quite a bit better than first thought last quarter.
According to 60 economists polled by Reuters, the initial estimate of 2-per-cent growth at an annualised rate is likely to be revised up to 2.8 per cent.
That pace will flag. Even assuming a political compromise to dodge the fiscal cliff’s full $600-billion (U.S.) in government spending cuts and expiring tax breaks, the budget stance is likely to tighten markedly in early 2013, crimping growth.
Luca Paolini, chief strategist at Pictet Asset Management in London, is pencilling in U.S. growth of around 1 per cent in the first quarter. After that, though, things should improve.
“The second quarter should be slightly better and, in the second part of the year, we’ll probably be above trend at around 3 per cent or even higher,” he said.
Contrast that with Japan, which Mr. Paolini said was doing “very badly,” and the euro zone, which contracted in the second and third quarters. With Greece and other southern members choking on debt, the single-currency area can expect a return to no more than minimum growth in the first half of 2013.
Similarly, Morgan Stanley expects the global economy to remain stuck in a twilight zone in 2013.
But growth in the U.S. should begin to expand at a slightly above-pace trend from mid-year as policy uncertainty lifts, the bank said in a report.