So last week’s survey asked if it’s ethical for those on food stamps to spend money on Christmas gifts. By a two-to-one margin, those responding okayed such spending. This isn’t entirely consistent with last week’s response that said recipients should use benefits only on healthy or basic foods. By that reasoning, if people have money for gifts, shouldn’t they spend it on food and ease the need for assistance? But this is another instance where my kids counted more than my ethics.
For today’s survey, I thought about discussing my New Year’s resolutions, but they’re too simple to sustain a blog: I hope to make enough money in the coming year so that I don’t have to sell my house, my body (which has dubious value), my kids or my dog. (Well, actually, I might entertain offers on that one. She’s a well-trained, six-year-old Black Lab with a tennis ball fetish.)
So instead I’ll ask readers a simple question: Do you think the economy in 2012 will be better or worse? Most experts agree conditions in the next 12 months will improve, with growth limping along at 2.4% GDP (up from 1.8% in 2011), unemployment at 8.8% (down slightly) and inflation at 1.9% (also down from 3.6%). (Research Department, Federal Reserve Bank of Philadelphia Survey of Professional Forecasters Fourth Quarter 2011).
Dr. Nariman Behravesh, Chief Economist of IHS, a financial information provider, predicts sluggish growth between 1.5% and 2%. But he cautions that two big dangers could derail his forecast: a financial meltdown in the Eurozone and a sharp slowdown in China.
Scott J. Brown, Chief Economist at Raymond James & Associates, also sees Europe as a threat to the U.S. economy. “There is still hope for Europe,” he writes in his 2012 forecast, “but it’s not looking good. A more substantial meltdown would have a significant impact on the U.S.economy and long-term interest rates.”
A recent survey of chief financial officers from throughout the country by Bank of America Merrill Lynch also shows tempered optimism. About half of those surveyed say they expect their corporate revenues to grow, and only 7% expect further layoffs. But they worry the government won’t be up to the job of repairing the economy. “Senior financial executives are more concerned about more factors that could effect the economy than in any previous point in the CFO Outlook survey’s history,” says the study. “Heading into a critical election year, it’s telling that 70% of CFOs cited concern about the effectiveness of U.S. government leaders and 63% cited the U.S. budget deficit.”
While the majority of forecasts foresee slow growth and gradual improvement, some take the opposite view and say these gains will simply be the last gasps before a major downturn. One such cheery prognosticator is Robert Wiedemer, Managing Director at Absolute Investment Management, and co-author of “America’s Bubble Economy,” a book that accurately predicted the current downturn. In his follow-up work “Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown,” he warns that the dollars being pushed into the system now will lead to massive inflation, a collapsing dollar and skyrocketing unemployment.
If you ever feel like spending money on an extra latte, watch the upbeat video on the Aftershock website. Or for an even more fun time you can search “2012 Depression” and come up with any number of blood-curdling predictions about the coming collapse of the economy.
So what do you think? Will the economy improve in 2012? Limp along slowly or hurtle back into the black? Or we will see the next Great Depression? And please let me know if there are any good bids out there for the dog.