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Kimberly Amadeo

Predictions for 2013

By January 11, 2013

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What's the outlook for the economy in 2013? First, economic growth will strengthen. Second, most economic reports are encouraging. Third, there are some structural problems in the global economy that need to be addressed. Until they are, they could cause the fourth economic trend in 2012, which is volatility. Best of all, the year will end on a higher note  -- just like every year since the financial crisis of 2008. Here's why:

  1. Economic Reports Continue to Improve -- GDP growth will improve to 3% in 2013. However, that's not enough to substantially reduce unemployment. As a result, the number of long-term unemployed will grow, unless many of them simply drop out of the labor force. To address this structural unemployment, a national program of retraining should be rolled out.
  2. Uncertainty -- Unfortunately, the national stage will continue to be dominated by issues that don't create jobs, such as sovereign debt crises in the U.S. and Europe, gun control and immigration reform. Although important, bitter battles do nothing but dampen confidence, creating uncertainty and further volatility, as they did in 2011 and 2012. If the policymakers could instead focus on job creation, the economy would bounce back and reach 4% GDP growth levels.
  3. The Housing Market Will Strengthen -- Continued reduction in the foreclosure rate is all that home investors and home-builders have been waiting for. As housing prices rise across the country, billions of dollars that have been sitting on the sidelines will return to the housing market, and prices will rebound. This has already happened in Phoenix, AZ and other previously hard-hit markets.
  4. Gas Prices Will Rise -- High gas prices are something you can count on . Oil and gas prices rise every spring, and drop every fall. If tensions rise in the Middle East, prices will rise higher and faster.

What It Means to You

What's the best way to navigate to improve your personal economy in uncertain times? Stay relentlessly focused on what your own financial well-being. Don't get caught up in fear, pessimism and doomsday predictions. Instead, work with a trusted financial adviser to develop a sound plan. Continue to improve your skills. Chart a clear course, and then stick to it. In that way, 2013 will be your best year ever.

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January 15, 2013 at 1:57 pm
(1) Chan says:

AS I go through your predictions for 2013 GDP growth to 3%, earlier in last July you were writing to me that in one year from now that is this July the economic conditions will be strong and further by reading this report it may take some more years and not this July 2013. I hope every body ,the general public and congressmen and all politicians will come together as one to improve economic conditions to be healthy and regain for the good of the whole US and act in a sensible manner.Give your thoughts kim.Thank you.

January 15, 2013 at 2:02 pm
(2) Chan says:

And probably Obama do not like this report before his Second term oath.
Give some encouraging report to him kim.

January 15, 2013 at 3:45 pm
(3) Kimberly says:

Hi Chan,

Well, Obama is a politician and he is right to focus on some issues that are important to the general public, like gun control and immigration reform. However, I think he should continue to focus on job creation, and it seems that topic has left the public arena. Even focusing on debt reduction is a little off the mark, in my opinion.

Nevertheless, the economy is strong even with all these headwinds. That’s why I do believe 2013 will be the best year yet since the financial crisis.


January 16, 2013 at 3:14 am
(4) Teh CSiang says:

What I can see is that at all times, the are plenty of jobs looking for job seekers…. What really count is the total income (salary, perks, etc) that employees receive… What happens now is that income received is insufficient to cover daily living expenses.. or… productivity do not
commensurate with pay, vice versa

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