Local Market Monitor’s National Economic Outlook

January 8, 2013
By: Ingo Winzer

The new year starts off pretty much as the old one ended, with an economy growing at a modest rate. In December, as in previous months, jobs increased 1.4 percent from last year and unemployment remained at 7.8 percent. Retail sales in November were up a moderate 3.7 percent over last year, a slight slowing. Gross domestic product in the third quarter grew at a 3.1 percent annual rate.

The growth we had in 2012, modest as it is, is a good sign for 2013, because it means the basic economy is doing OK despite some missing pieces: government and construction. There won’t be much boost in Federal spending in 2013, but state and local finances are in better shape and low interest rates will allow renewed spending on infrastructure and education.

Construction is the odd duck of the economy because it doesn’t necessarily make a product that people want, but it has an enormous financial impact in the meantime. If the 2 million construction jobs lost since 2007 were reinstated, unemployment would be 6.5 percent. There are now glimmerings of an increase in construction, which will boost the economy later in 2013. Jobs for specialty trade contractors in December were up 3 percent from last year; and new building permits in 2012 were up 30 percent from the (low) level of 2011.

About the Author: Ingo Winzer is President of Local Market Monitor, and has analyzed real estate markets for more than 20 years. His views on real estate markets are often quoted in the national press and in 2005, he warned that many housing markets were dangerously over-priced. Previously, Ingo was a founder and Executive Vice President of First Research, an industry research company that was acquired by Dun and Bradstreet in March 2007. He is a graduate of MIT and holds an MBA in Finance from Boston University. He resides in Cambridge, Massachusetts.

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