- The unemployment rate will end between 8.0% and 8.5%. The employment situation will continue to improve, though not fast enough to lift large numbers of people out of misery and poverty. The employment-to-population ratio will once again do very little, staying between 58.5% and 59%.
- Housing prices will continue to fall slowly. We'll see another 3-6% decline in existing home prices.
- New homes and autos will not provide a major boost. Some people have been predicting a rebound in the two sectors, but I think we are going through some long-lasting changes in behavior that will keep both from being major drivers of growth in 2012.
- The effective Fed Funds Rate will stay below 1%. There's no inflation and growth is still weak, so the Fed won't move much, if at all.
- The US dollar will strengthen mildly. The US will be the strongest major developed economy this year, as the Eurozone (collectively) will not grow, the UK will contract, and Japan will grow only slightly. Thus the dollar will strengthen about 5% in the broad trade-weighted index.
China will continue to try to export as many problems as possible, so the dollar will be essentially unchanged against the yuan again.Update 2012.03.17 - I mis-read the data for the previous year, which saw the dollar weaken by about 4.5%. I think we'll see roughly the same change this year, or 5%.
- Oil will end the year at $95/bbl +/- $5. Increased US supply, changing driving habits, and slowing growth in Europe (on average) will balance out growing demand from the developing world. All bets are off if Iran or Israel does something stupid, however.
- The Euro will survive. It will be horrible for people living in the GIPS (ex-Ireland, where everyone will just emigrate), but the Eurozone will muddle through for yet another year.
- Mitt Romney will be the Republican nominee. Since the only other candidate with a competent national organization is a kook, Romney will win by default.
- President Barack Obama will be re-elected. See above.
- Placeholder for House and Senate.
I'm not up on the Congressional races, so I'll fill this in later.Update 2012.03.17 - The Senate will remain in Democratic hands, at 50-50 or 51-49.
- The beginning of the end in Afghanistan will be downplayed. There will be some troop reductions, but for political reasons the administration will try to downplay it, and the media will be too busy calling the political horse race to cover it.
Monday, January 2, 2012
Predictions About the Future: 2012 Edition
This year I'm being a little more specific, so I'll probably do worse than last year.