Cloudy with a Chance of Growth?

Volume 14, Number 4
Fourth Quarter 2012

Graphic of chance of growthEconomic forecasting is a notoriously difficult process. Take the economic recovery, for example. As senior economic analyst Andrew Flowers writes in the fourth-quarter issue of EconSouth, this recovery has consistently underperformed forecasters’ projections. Will 2013 hold more of the same?

Economic forecasts for the upcoming year are already relatively weak, writes Flowers in "Cloudy with a Chance of Growth." Further, business investment and exports—two components of growth that had performed relatively well in the recovery—began to weaken in 2012 and could weaken further next year, largely due to slower global growth.

Uncertainty also plays into forecasts for 2013, as do the risks associated with negative economic shocks. These risks include economic and political frailty in the euro zone, potential energy price spikes associated with unrest in the Middle East, and, perhaps most pressing in the United States, the fiscal cliff.

On a more positive note, the housing market improved in 2012 and is expected to be a "bright spot" in the coming year, Flowers writes.

To learn more about what might be in store for the economy in 2013, read the full article in the fourth-quarter issue of EconSouth, available in print and online.