Pragmatic Capitalism

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Read of the Day: 3 Reasons 2013 Could Surprise on the Upside

There’s a lot of pessimism surrounding 2013 as the fiscal cliff remains unsettled.  But what about the upside risks?  The Washington Post listed three big ones that could cause the economy to surprise on the upside in 2013:

Housing. The biggest cramp the economy these last few years has been the housing sector, with sales near historic lows for half a decade. At first, this was a necessary adjustment, as the overbuilding of homes during the 2000-2006 boom was worked off. But we’re far beyond that point now, with, if anything, significant under-building of homes in recent years relative to demographic trends. That’s true even when one adjusts for the lower-than-normal “household formation” during the recession and its aftermath (think young college graduates living in their parents’ basement instead of getting an apartment).

Household debt. American consumers, we have often heard, have been weighed down the debts they incurred during the boom years — credit card bills, student loans and, especially, burdensome home mortgages. A widespread theory is that consumer spending will never really rebound until Americans have dug themselves out from under those debts.

State and local governments. Among the persistent drags on the economy through this weak recovery have been state and municipality budget woes. State and local governments have slashed spending and jobs, essentially counteracting federal stimulus efforts with fiscal anti-stimulus measures of their own.

Read more here.

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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