Pragmatic Capitalism

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Jan Hatzius: The US Economy Should Pick-up in 2013

Jan Hatzius, Chief Economist at Goldman Sachs was on Bloomberg yesterday discussing his outlook for the global economy and markets.

On the worst case fiscal cliff scenario where US goes several months without an agreement:

“Very high probability of renewed recession…spillover effects for the rest of the world”.

On Europe:

“Europe is in a recession…will last through first half of 2013.”

On the most likely path of the US economy:

“Sub 2% growth in first two quarters of 2013.

…If it wasn’t for that fiscal drag, I think we’d be looking at above-trend growth right now.

…It’s a pretty weak economy in early 2013 but then I think as the year progresses we start to see a gradual acceleration.

…We have 2.5 percent growth in the second half of the year, and we expect further acceleration into 2014 and 2015.

…The private sector is doing pretty well.”

On the likely path of monetary policy and QE:

“We’re expecting an increase in the pace of balance sheet expansion from the current $40 billion per month to something like $85 billion a month…That basically implies that the pace of asset purchases of longer-term Treasuries and mortgage-backed securities stays at the current $85 billion number or somewhere very, very close to that.”

Source: Bloomberg

Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC.Orcam is a financial services firm offering asset management, private advisory, institutional consulting and educational services.He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.
Cullen Roche

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