Jan Hatzius: The US Economy Should Pick-up in 2013

Jan Hatzius, Chief Economist at Goldman Sachs was on Bloomberg yesterday discussing his outlook for the global economy and markets.

On the worst case fiscal cliff scenario where US goes several months without an agreement:

“Very high probability of renewed recession…spillover effects for the rest of the world”.

On Europe:

“Europe is in a recession…will last through first half of 2013.”

On the most likely path of the US economy:

“Sub 2% growth in first two quarters of 2013.

…If it wasn’t for that fiscal drag, I think we’d be looking at above-trend growth right now.

…It’s a pretty weak economy in early 2013 but then I think as the year progresses we start to see a gradual acceleration.

…We have 2.5 percent growth in the second half of the year, and we expect further acceleration into 2014 and 2015.

…The private sector is doing pretty well.”

On the likely path of monetary policy and QE:

“We’re expecting an increase in the pace of balance sheet expansion from the current $40 billion per month to something like $85 billion a month…That basically implies that the pace of asset purchases of longer-term Treasuries and mortgage-backed securities stays at the current $85 billion number or somewhere very, very close to that.”

Source: Bloomberg


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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • HankB

    Cullen, he seems to have some of the same views you have here. Do you agree that the private sector is picking up the slack and will help growth in 2013?

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  • Syd

    That is a big expansion of QE he expects. I wonder what the real impetus is for the Fed to do this. It strikes me that the Fed continues to be nonchalant about intervening in financial markets and possibly encouraging financial asset bubbles.

  • Cowpoke

    “It’s a pretty weak economy in early 2013 but then I think as the year progresses we start to see a gradual acceleration.”

    Err Uh, Ja… No You Won’t. Because there is a Shitload of healthcare laws and regulations that are coming down the pipe that a lot of folks who voted for democratic policies and OBAMMY care will soon come to fruition.
    So when people start getting the bill for the nonsense they voted for, I think the economic winds will not resemble your hypothesis.

  • Alberto

    The historical track record of Mr. Hatzius is not better than that of my uncle (a gardener and not a PhD in finance). Exactly like the forecastings of my uncle no one will remember the forecastings of Mr. Hatzius 6 months from now.

  • William Bedloe

    Just a thought…National debt was projected to be at 16.2 trillion by end of 2012 (currently over 16.3 trillion)…during the election, Obama promised taxpayers 4 trillion in cuts, but their latest plan has no such cuts, so some project an additional 4 trillion added to the national debt by 2016 (that would be 20 trillion by 2016)…democrat plan is now clearly one of tax and spend, at the sae local and national level. Obama has already made the national dialogue toxic with his never ending campaign speeches. Hatzius my be optimistic, but I am not.

  • Bond Vigilante

    A lot of “Expect(s)”, “we should”, “I/we think”. Nothing but a lot of guesses.

  • perpetual neophyte

    Can you point to some concrete examples, Alberto? I have a whole catalogue of claims/expectations like this that are on a 6-month follow-up list but I haven’t gotten around to compiling.

    Mosler and Cullen definitely tend to be on the better end of the batting average of the ones I follow. I think that they make very few big and even fewer longer-term calls (i.e. more than a quarter out) is a big part of that.

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