Business Trends

U.S. Economy Continues to Grow, by CCIM Institute

File Type: Free Content, Article
Release Date: April 2013
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There will be no fresh recession in 2013, predicted the CCIM Institute’s Quarterly Market Trends First Quarter 2013 report. The report went on to say that sequestration, even if not reversed, is not large enough to tip the economy into a new downturn, but it can hold back short-term growth this year, possibly setting a better long-term foundation for future economic expansion as the runaway deficit gets its due attention. The U.S. GDP will grow at a slow rate of 1.5 to 2.0 percent this year.

The fourth quarter 2012 slowing in the economy was driven by one-time factors of very large defense spending cuts (after a surprisingly strong defense spending during the third quarter of 2012) and by rapid depletion of business inventories. Even with the sequester, defense spending will only moderately decline and businesses will look to restock its inventories.

The extension for another year of bonus expensing of business equipment will also help private aggregate demand to recovery. Consumer spending meanwhile has definitively turned positive, according to the report, though the ending of the temporary payroll tax reduction will impact consumer demand. Consumer spending growth is expected to be at two percent in 2013.

Legal and regulatory uncertainties will probably slow the economic expansion to some degree. Many aspects of the Dodd-Frank legislation have yet to be implemented. Also, lending to large corporate businesses has grown, but lending to small businesses has actually declined. Finally, the new Affordable Health Care Act, more commonly known as Obamacare, will slowly make its impact on business decisions starting this year in anticipation of a 2014 start date. Despite the uncertainties, however, the momentum of the economy appears to be building, noted the report.