NEW YORK CITY-The economy has cleared some major hurdles on its way to true solvency in recent weeks and months, including the so-called fiscal cliff. But to the extent that uncertainty still prevails, and much of that uncertainty centers around the still-battling bureaucrats of the Beltway, the economic picture remains hazy.
That was the upshot of a IHS’ Global Insight‘s Monday webinar. Chief US economist Nigel Gault started by framing the entire good-news/bad-news scenario:
First, the bad news: The fiscal cliff deal removed stimulus, didn’t fix the sequester and didn’t cut the long-term deficit much, and foreign weakness has dampened export growth.
On the good news side of the ledger, Gault cited improving credit conditions and increased credit demand, the uptick in housing activity and prices and an increase in vehicle sales, both of these latter dynamics speaking to increased consumer confidence.
Globally, the same good-news/bad-news balance comes into play. “The prospects for 2013 look a little better,” said Gault, referring to his the modest growth the US economy should enjoy this year. “But we’re not looking for growth in the Euro zone until 2014,” he noted. (The same dynamic holds true for the private equity funds. See our International lead.)
The President and Congress, he said, did a fair job of kicking the debt ceiling can down the road, at the very least until May, “possibly making it a non-issue.” However, GDP growth in the next few months really depends on how those same politicians deal with the sequester issue.
On the business side of the equation, Gault noted an increase in equipment demand, but thinks that, based on architectural billings’ recent flatness, that there won’t be a slew of new office buildings breaking ground, at least for the foreseeable future.