The U.S. and Canadian economies will grow slightly faster in 2012—if not knocked off track by upheavals in Europe, according to an Associated Press survey of leading economists and the Royal Bank of Canada. 2011 ended on somewhat of an upswing; the U.S. generated at least 100,000 new jobs for five months in a row—the longest such streak since 2006. The number of people applying for unemployment benefits has dropped to the lowest level since April 2008, a trend suggesting that layoffs have slowed substantially and hiring could pick up.
It’s an election year, which means that those in power will try their best to apply a fresh coat of paint to the economy. But by the time President Barack Obama runs for re-election in November, the three dozen private, corporate and academic economists say unemployment will barely fall from the current 8.6 percent rate, and they expect the economy to grow 2.4 percent next year. In 2011, it likely grew less than 2 percent. Both factors will play deeply in the U.S. election.
Dean Maki, chief U.S. economist at Barclays Capital, says the U.S. economy remains somewhat fragile. One threat is the risk that Europe’s debt crisis triggering financial market stress around the globe. A shock to the U.S. economy, he says, might not be as dangerous if it were growing at a healthier 4 percent to 5 percent annual pace. But when growth is stuck at 2 percent or 3 percent, a major global crisis could stall job creation and raise unemployment.
A majority of the economists say the economy will get a lift from Federal Reserve policies. The Fed has said it plans to keep short-term interest rates near zero through at least mid-2013 if the economy remains weak. The central bank also has begun a campaign to try to push down mortgage rates and other long-term interest rates through next June.
Those surveyed also think the economy is strong enough to withstand higher oil prices. At near $100 a barrel, oil prices are up 10 percent from a year ago. But only two of the economists AP surveyed expect the higher prices to slow the economy “a lot.”
“Europe appears to be the only real impediment to keeping this recovery from happening,” said Joel Naroff, president of Naroff Economics. Still, the economists expect European policymakers to find a way to prevent the crisis from escalating into a global financial panic. If Europe can stabilize its economies, the U.S. stock markets would rally sharply, economists say, and prospects for U.S. economic growth would brighten.
Improvement Ahead for the Supply Chain
According to Page Siplon, Executive Director of the Center of Innovation for Logistics, there are four “encouraging statistics” surfacing for the supply chain:
- Transportation Employment Up. In the November Edition of the Logistics Market Snapshot, Siplon noted that transportation employment increased more than 2 percent year-over-year. Transportation industries added about 16,500 employees in October, accounting for nearly 21 percent of the U.S. net employment gains added that month,” said Siplon.
- Exports Up. The second positive indicator came in September, when the U.S. exported more than $180.4 billion of cargo—the highest ever on record. September U.S. exports grew 15.9 percent year-over-year.
- Intermodal Traffic Up. Domestically, intermodal traffic grew 6.3 percent in the 3Q 2011, and combined international and domestic rail volume topped 3.65 million intermodal units in the 3Q, the seventh straight quarter of year-over-year increases. [Intermodal traffic is the transport of freight in a container or vehicle, using multiple modes of transportation (rail, ship, and truck), without any handling of the freight itself when changing modes.]
- Commercial Real Estate Up. Finally, the fourth indicator comes from the commercial real estate firm of Grubb & Ellis, which expects the U.S. industrial real estate market to return to prerecession levels by the end of the year.
Sources: Associated Press, Royal Bank of Canada Economics Digest, Dec. 2011,
Supply Chain Management Review, Nov. 2011.