Marking my forecast for 2013 to market

  - by New Deal democrat

It's time to mark my 2013 forecast from back in January to market.

Here's what I said back in January about the first part of the year:

for the next 3 to 6 months, the economy will continue to shamble along just barely avoiding recession. Thereafter all of the long leading indicators are suggesting further improvement
....

.... It appears that gas prices bottomed in December 2012 at the identical price they were in 2011. It is reasonable to expect that the Oil choke collar will engage by spring and remain engaged, with gas quite likely hitting $4 a gallon by summer.

So is the balance tipped towards expansion or contraction in the first part of the year?.... Congress and President Obama just threw a monkey wrench into the works, in the form of a 2% payroll tax increase on the first $110,000 of income. ... A new and significant drag has been added to consumer spending. 

.... Frankly, I expect to see a significant pullback in consumer spending as a result of the decrease in disposable income within the next 3 months. Unless a further opportunity to refinance at even lower interest rates appears, that may be enough to tip us into a short term contraction at some point in the first 6 months of this year, specifically including one or more months of actual job losses beginning in March or April. 

Here was my forecast for the second half of the year:

... the K.I.S.S. signal of a positive yield curve and positive M2 suggest that the economy continues to grow throughout 2013. 

.... the resurgence of the housing market, and the continuing accommodation in interest rates and monetary policy, look like they will come to the rescue again later in the year, provided Washington can avoid burdening the consumer with further austerity measures taking effect this year.

 My forecast for a cutback in consumer spending due to the reinstatement of an additional 2% withholding for Social Security, and a likely actual month or two of job losses as a result certainly did not occur.  But then, just about everybody thought that consumers would pull back.  It just goes to show that the American consumer is the world champion of their art!

On the other hand, my forecast from January of a first half just shambling along, followed by stronger growth in the second half, and for the Oil choke collar to begin to loosen,  was pretty much on target.  First quarter GDP was just barely over 1% - which is usually consistent with a recession -  but then improved to 2.5% in the second quarter, and 4.1% in the third quarter.  Gas prices on average were down $0.10 for the entire year on a YoY basis.  Industrial production, sales, payrolls, and wages all improved as the year went along.

Thanks for reading this year.  I'll be back again with a 2014 forecast after New Year's!