Econofusion Reigns as 2012 Approaches

We are forecasting ongoing recovery in the United States through 2012 and into 2013—despite the negatives and because of the positives.

“Econofusion: A state of mind frequently found at the crossroads of recession and recovery associated with foregone opportunities.”—ITR Trends Report, September 2011. We are at that position in the business cycle where tension regarding the likelihood of a hard landing (recession) or a soft landing (diminishing/stalled ascent) in the not-too-distant future is on everyone’s mind. Advocates for either outlook seemingly have cause for their respective positions, which creates a lot of confusion. Making the right moves to optimally prepare for 2012 is left hanging in the balance.

It would take a very long article to list and discuss all the positives and negatives in detail, but I would like to share some of them with you (below). The bottom line is that we are forecasting ongoing recovery in the United States through 2012 and into 2013—despite the negatives and because of the positives.

We are not unaware of the dangers.  However, the natural state of the economy is toward growth and we are anticipating that the positives will overpower the negatives and that the U.S. economy will expand in the coming year.

I was recently doing a presentation when a fellow presenter commented that the likelihood of a recession was high because retail sales was “on its back”.  I assume he meant like a turtle—helpless and going nowhere. I thought a little economic reality might be of value. Retail spending over the last 12 months was about what Americans were spending in the 12 months prior to October 2008 when the financial collapse hit. Sales are 2.9 percent above the year earlier (12 month moving total (MMT) basis).  

Preliminary reports indicate that the slate of bad news in August, plus hurricane Irene, did not seem to stop back-to-school sales.  Second only to Christmas in volume, late summer is often viewed as the precursor to holiday sales.  Retailers expect to hire the same number of seasonal employees for the holidays as last year.  Credit card use has increased over the past six months, which is encouraging.  In addition, it is worthwhile noting that the seasonal rise in retail sales since the March low has been normal.  It is hard to conceive of a recession when spending is normal.

Sidebar:
October, 2011, Economic Positives and Economic Negatives
To read the feature article, visit www.automationworld.com/columns-9438

Alan Beaulieu, alan@itreconomics.com, is president of the Institute for Trends Research (ITR). His weekly radio show, “Make Your Move,” can be heard at www.voiceamerica.com every Monday at 4 p.m. (Eastern time). Podcasts are available through voiceamerica and through iTunes.

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