Will US economy rebound in 2013? Forecasters say not much.

An improved housing market and better auto sales are expected to boost US economic growth in 2013, but slowing economies in China and Europe will be a net drag. Meanwhile, Congress will 'kick the can down the road' on extending Bush tax cuts, economic forecasters predict.

Matt York/AP/File
Workers frame the first home in a new Trend Homes community early in Gilbert, Ariz., in this July 11, 2012, photo. Economic forecasters say an improved housing market will be a main driver of economic growth in 2013. Real estate experts say the Phoenix metro housing market is recovering faster than other US cities.

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.

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.