UCLA’s Anderson Forecast Points to Modest Growth in 2013

05 Dec, 2012

UCLA Anderson Forecast Senior Economist David Shulman looks beyond the fiscal cliff and assumes that the executive and legislative branches of government will reach an agreement before the year’s end.  The fiscal cliff describes the expiration of previously enacted tax cuts combined with some automatic spending cuts totaling about $600 billion — about 4 percent of the economy — scheduled to take effect in January 2013.

In its final quarterly report of 2012, the UCLA Anderson Forecast for the United States says that GDP will grow at less than a 2 percent annual rate through mid-2013. After that, the forecast expects growth to pick up and exceed 3 percent for most of 2014 with housing activity leading the way. Unemployment will stay close to the current 7.9 percent rate in 2013, but gradually decline to 7.2 percent by the end of 2014. By the end of the forecast period, inflation is expected to be above the Federal Reserve’s 2 percent target, bringing to an end the zero interest rate policy that has been in place since late 2008.

Even if the government reaches a compromise, considering the recent upward revision to the forecast’s third quarter GDP data, “the near-term outlook for the U.S. economy continues to be characterized by modest growth,” Shulman writes. “Specifically, we are forecasting that real GDP will increase at an annual rate of only 0.7 percent in the current quarter and less than 2 percent growth in 2013’s first half.”

For complete details, visit https://uclaforecast.com. The forecast is an initiative of the UCLA Anderson School of Management, https://twitter.com/UCLAAnderson.

Illustration by Stuart Miles at Free Digital Photos.net

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