What’s Ahead in 2012: A Slow but Definite Economic Upturn

by Philip Jay LeNoble, Ph.D. Nov. 21, 2011

According to a sample of economists around the nation, they are seeing a faster growth pattern going forward into 2012, according to a quarterly survey from the National Association for Business Economics.

While the U.S. economy will continue to expand through next year, boosted by rising consumer and business spending, joblessness which may be attributed to expanded technological advances in industry, an economic recovery is expected occur and to remain high the speed of the housing recovery will be sluggish but remodeling older homes will help boost consumer spending in that sector.

According to Richard Wobberkind, associate dean of the Leeds School of Business at the University of Colorado, economists are still disturbed about the continued high levels of government deficits and debt, excessive unemployment, and rising commodity prices, the president of the association, Richard Wobbekind, said in a statement. Wobbekind, representing a panel of economists, project 2012 will see the economy growing 3.4 percent from 2011. This is, as stated “consistent with the moderate pace of growth” that usually takes place during recoveries from severe financial crises such as the financial collapse that led to the Great Recession.

Nearly 40 percent of the National Association for Business Economics’ survey’s respondents think that the recovery will continue to grow more moderately, while one third believes expansion will be more robust. A smaller percent — or about five out of 40 of the respondents — expect the growth to be “subpar.” Others not included in the panel believe those unemployed in segments of the labor force demonstrating more physical labor will need to retrain themselves in other skill sets as technology advances breed a more jobless recovery. Those jobs once utilizing more of the unskilled labor force in the manufacturing sector are no longer projected to rehire those once employed because the advances in the field of robotics has reshaped those industries. By the last quarter of 2012, the joblessness rate will still be high — 8.2 percent. In January of 2012, the unemployment rate was still holding at 9 percent.

The outlook for consumer spending has improved, and is expected to grow 3.2 percent this year. That’s up from a 2.4 percent growth forecast in November. Somewhat encouragingly, in 2012, spending is expected to rise by 2.9 percent, which is the same as the annual growth rate over the past 20 years.

The NABE panelists see business spending as a bright spot in 2011 and 2012, with double-digit percentage growth in spending on equipment and software. But spending on structures remains weak, expected to grow just 1.4 percent by the end of 2011. By next year, however, spending on structures is expected to grow by 4.8 percent.

Local businesses have an excellent opportunity to expand their share of market in 2012 if they act positively in the arena of media marketing investment while competitive businesses in the same occupational classes remain fearful and continue to sit on the sidelines. As the recovery increases its pace, historically, it has been revealed that those businesses who have maintained their resilience in pursuit of higher market share find themselves far ahead of their larger competitors who remain lagging behind.