No matter who gets elected president next month, the United States economy in 2013 will have only tepid growth.
Does that sound like this year all over again? Yes, indeed.
At least that's the view of 44 professional economic forecasters, members of the National Association of Business Economics, who on Monday released their outlook for the coming year.
The economists have pretty much discounted all the political rhetoric about what will happen to the economy if the "Bush-era tax cuts" are not renewed. According to the Congressional Budget Office, if Congress and the White House can't reach a compromise on the budget and taxes, the economy will go over the "fiscal cliff" into a recession. But that's not what is likely to happen, say the forecasters.
"The lame duck Congress will kick the can down the road," says Patrick Newport, an economist at IHS Global Insight in Lexington, Mass., and a survey participant. "It's what they have done in the past."
He reasons that no one will want to be blamed for pushing the economy into a recession. "The smartest thing is to let the next Congress and administration take care of the problems," says Mr. Newport.
Instead, the economists in the survey say the dominant force behind the US economy will be the slowing economies in China and Europe.
"American businesses don't hire as much and don't invest as much when there is uncertainty, and there is a lot of uncertainty in Europe," says Newport.
By midyear, the forecasters anticipate the situation in Europe will stabilize. Once that happens, economic growth will begin to improve and by the end of the year, the gross domestic product will be growing at a 3 percent annual rate. For the year as a whole, GDP will grow 2.4 percent, up from an expected 1.9 percent in 2012.
One main driver of the economy in 2013 will be the improving US housing market. In 2012, NABE forecasts that new home starts will rise by 23 percent and then another 13 percent increase in 2013.
An important reason for the improvement is the growing population, which is adding about 3 million people per year.
"People have to live someplace," explains Newport. "Pent-up demand is starting to lift the numbers."
However, improvement in housing is taking place from a low base, he notes. In a normal year, builders construct about 1.5 million new homes and apartments. Even with the improvement this year and next, construction will still be about half of a normal year.
Another positive for the economy next year is expected to be the automobile market. The improvement in light vehicle sales will come because so many Americans are currently driving older vehicles that need replacement.
The modest economic growth means that the jobs market will not show any major gains. By the fourth quarter of next year, the NABE economists anticipate, the unemployment rate will be 7.8 percent, the same as it was last month.
Businesses will be adding to their payrolls but at a moderate rate. In 2012, the economy will add on average 132,000 jobs per month; in 2013, the economy will add on average 155,000 jobs per month, according to the forecast.
That's one main reason the economists anticipate that the Federal Reserve will continue its accommodative monetary policy.
"The consensus is that the Fed will not start to raise interest rates until 2015," says Newport.