2012: The Year of Recovery. Again.
December 12, 2011
Predictions are easiest to assess, when a year is over.
In March 2009, Goldman Sachs predicted that that year would be the "year of survival,'' for investment banks and other top-drawer global financial players.
The following year, 2010, was dubbed the "year of doubt," as recounted last Monday at the outset of the Super Bowl of Indexing conference in Phoenix by Heather She-milt, manging director and head of the bank's pensions, endowent and foundations group.
But that year ended with the Federal Reserve buying back $600 billion in long-term bonds, to keep borrowing rates down.
Which, in theory, meant that 2011 would be the Year of Recovery for the U.S. economy.
Hasn't quite worked out that way. Joblessness remains high, even if recent results have gotten that down to 8.6% of the workforce.
The earthquake and tsunami in Japan, as well as the sovereign debt crisis in Europe have changed the outlook considerably, she said.
The price of 10-year Treasury bonds has been pushed as low as 1.72% a year. Stock prices, year to date, are still down from a year ago, despite early December gains.
Congress can't agree on how to cut the nation's $1.2 trillion deficit. The United States' total public debt now equates to more than 170 percent of its gross annual economic output.
And paying both those down - and getting any serious economic growth -- will be "pretty daunting,'' says Robert D. Arnott, chairman and founder of Research Affiliates, a Newport Beach, California-based investment management firm. Because post-war Baby Boomers are starting to retire, in droves.
"The better question is, will the year 2012 be the year of recovery?" Shemilt asked.
Or, how about 2013?
See You In ... 2012
This is the final edition of Money Management Executive for 2011.
We will be on a two-week publishing break, through the end of the month. Look for our next issue on Jan. 3, 2012.