In a brief note out today, research firm Capital Economics seeks to separate itself from the masses of forecasters with its bearish stance on the US economy.
Here it is in a nutshell:
The key area where we differ is on prospects for growth in the three large developed economies: the US, euro-zone and Japan. The differences are most pronounced for 2012. (See Charts 1 & 2.) For the US, we agree with the majority view that GDP will rise by around 3% this year. But we are much more pessimistic than others about prospects for US growth in 2012. By then, the boost to activity from the second fiscal stimulus will be fading. Indeed, consumer spending is already looking fragile as a result of higher food and gasoline prices. (Together, these price rises mean that households would have to spend an extra $80bn to buy the same amount of food and gasoline this year – the equivalent of 0.8% of total consumption.) We also expect concerns about unemployment and the faltering housing market to undermine consumer confidence further.
Photo: Capital Economics
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