The P.A.

A weekly address from Patrick Adams,
President of St. Louis Community Credit Union

Guarded Optimism For Economy In 2013

On November 5th, 2012, posted in: Uncategorized by

Emerging economic data continues to reflect a slow recovery period forthcoming.  Job creation and housing related matters will not move fast enough to alleviate overall concerns.  Generally speaking, headline inflation (oil & groceries) have remained high and, as a result, have negatively impacted St. Louis residents’ “real” wages.  The automobile manufacturing sector is slowly moving in the right direction.  However, it remains far behind the numbers of cars sold prior to the recession. The banking industry, including credit unions, will continue huffing and puffing due to low rates and rising costs.  Employment numbers remain slow, but are pointed in the right direction.

There you go.  That’s about as optimistic as I can be for 2013 in the realm of economic improvement.  All of this joy can dissipate if the “fiscal cliff” is not resolved.  If you don’t know what the “fiscal cliff” is, think a political game of chicken played with our livelihood.  Nevertheless, 2013 should be better than 2012.  Sort of like getting only two wisdom teeth pulled instead of all four.

The Federal Reserve through (QE1, 2, 3) monetary policy is committed to increasing employment numbers.  It is the Fed’s hope that low rates stimulate investment that, in turn, creates jobs.  Unfortunately for the Fed, uncertainty in policy-making and political cooperation trumps low rates.  As a result, business remains flush with cash and slow to proceed with investment. Uncertainty in healthcare, tax rates, and regulation also slows small business investment.  Since most jobs are in small business, this creates a problem.

While the Fed’s monetary policy has been subject to debate on the issue of possible inflation, 2013 low rates and the prospects of no immediate rise in rates now forecasted into 2015 confirms that the “economic recovery” initiative has prevailed as the Fed’s leading concern.  Lower interest rates should serve as a boon for consumer growth.  The Fed’s persistence in maintaining record low rates reflects their continued attempt to facilitate economic recovery.  Unfortunately, to this point, low rates have not worked at the consumer level due, in part, to so many consumers not gaining their benefit because of credit history problems, employment security, or loss of equity in one’s home.

We have forecasted that the most likely economic climate in 2013 is one that remains slow with signs of “guarded optimism.”   We feel that the economic engines could start moving forward in the mid-to-latter part of the year.  That is a “glass half full” guess and it is our hope that the signs of improvement currently being realized bleeds over into 2013 (early and often).

Election results, geo-political activity, natural disasters, man-made disasters and other such stuff can derail any progress to some degree or another.  And you thought the kids knocking on your door last week dressed as zombies, ghouls, goblins and ghosts were scary.  NOPE!!!

No Responses to “Guarded Optimism For Economy In 2013”

Leave a Reply