A striking fact of the past four years is that the world's 10,000 or so economists have overwhelmingly failed to predict the three major economic developments of this period, 2007-2011. First, only a handful predicted the financial crash of 2007-08 and subsequent deep global contraction that I have called an "Epic" recession, to distinguish it from normal recessions (and also from depressions).
Second, the 10,000 have failed to predict the current protracted economic stagnation that has occurred since 2008 as well; instead, nearly all mainstream economists in recent years forecast a sharp "V"-shaped sustained economic recovery since 2008-09 that has yet to take place. Third, at year end 2011, they once again failed to see the sharp and even deeper retrenchment of the US and global economies that is coming, no later than 2013 - and possibly even earlier should the eurozone currency and banking system crash in 2012, which appears increasingly likely. In contrast to mainstream economists, the methodology applied to the US and global economy used by this writer to predict the US and global economies the past four years (as outlined in my book, "Epic Recession: Prelude to Global Depression") has relatively accurately forecast the course of economic events. Based on that same methodology, this writer has recently predicted a double-dip recession in the US no later than early 2013, a major financial crisis in the eurozone and a slowing of the global economy once again. This double dip in the US and global slowdown in 2012-13 is treated in more detail in this writer's forthcoming book available in 2012, Obama's Economy: Recovery for the Few." In the meantime, here are this writer's predictions for 2012-13 for the US, euro and global economy.
Predictions for 2012 to 2013
1. The US will experience a double-dip recession in early 2013. Or, in the event of another banking crisis in Europe, perhaps - though less likely - earlier in 2012.
Despite a continual hyping of economic reports by the media and business press in recent months, there is no recovery underway for jobs, housing or state and local government finances. Job growth has been stuck throughout 2011 at around 80,000 to 100,000 a month per the Labor Department's monthly data. The broader measure of unemployment, the U-6 rate, has been consistently in the 16 percent range, or about 25 million to 26 million for the past year. State and local governments continue to lay off workers in the 20,000 range every month. Little effective stimulus will be forthcoming from the federal government in 2012, despite the election year, and further deficit cutting is even possible in 2012. The first quarter of 2012 will record a significant slowing of gross domestic product (GDP) growth once again. Should the eurozone debt crisis escalate once more in the second quarter of 2012, the US economy will weaken further in the second quarter. It may even slip into recession if the euro crisis is particularly severe. More likely, however, is the scenario of an emerging double-dip recession in early 2013, when deficit cutting by Congress and the administration intensifies.