Economic Outlook 2013

Economy

Unfortunately, the economy faces many hurdles. Politicians often try economic "fixes" that lead to hardships in post-election years as the prospect of voter wrath is far away. Since 1945 post-election years have been touched by a recession 59% of the time.

Higher taxes in 2013 will curtail disposable spending. Our analysis of individual state tax codes over the last ten years suggests higher tax rates hurts economic growth and job gains.Surprisingly, it also leads to slower tax-revenue growth than states with lower tax rates.

The new health care law increases regulatory burdens. The Competitive Enterprise Institute estimates the total regulatory compliance burden for 2013 will top $1.8 trillion; triple our national spending on defense.

In the recent past our nation's problems have been mitigated by an export boom. Export growth has averaged over 9% a year. Recent numbers have been much more tepid. Furthermore, Europe and Japan are facing recessions, making a rebound in exports unlikely.

There are areas of opportunity. The housing sector is finally recovering. Traffic levels of prospective buyers are at levels usually associated with rising home prices. Construction and related industries may benefit. The auto sector is also seeing a rebound.Since the average car on the road is over 11 years old we are seeing a steady rise in auto sales.

Positives		Negatives
	Manufacturing new orders are rising		Higher taxes
	Improving home sales/prices		Too many regulations
	Uptick in auto sales		Quantitative Easing ineffective
			Stronger dollar and sub-par exports

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