Economic OutlookGDP2% growth in '12, second half a bit better than the firstUnemploymentAround 8% by '13Interest ratesLittle or no increase in 2012Inflation2% in '12; higher in the second half than the firstBusiness spendingA bit slower in the second half than in the firstEnergyOil trading at $90-$95 a barrel this fallHousing salesUp 7% in '12 as prices inch higherRetail sales6% growth in '12, down from 7.4% in '11Trade deficitClimbing to $585 billion in '12; 5% gain slower than in '11 GDPLast updated: September 27, 2012The stubbornly tepid economy will persist for the rest of this year and next. Real GDP growth of about 2% this year is the best to expect, with more of the same next year.Although action by Europe's central bank to shore up the euro zone's financial system should help buoy demand for U.S. exports by softening recessions in some countries, a pickup in U.S. consumer spending is needed. It typically provides about two-thirds of economic growth.Households continue to be weighed down by puny gains in net new job creation and the added pain of high gasoline prices, which act like a tax, siphoning off buying power. Prices at the pump should dip, which will help. So, too, will continuing improvement in housing and an increase in auto sales. Business investment, however, will plod along as companies wait for a clear signal from Congress on the expiration of the Bush tax cuts and on automatic spending cuts slated for 2013.Dept. of Commerce: GDP Data EMPLOYMENTLast updated: September 7, 2012It's clear now that job creation will continue at a sluggish pace in the second half of 2012.The economy just can't seem to achieve enough velocity to escape the doldrums. Though sales of cars and homes are strong, they are not strong enough to fuel growth in the rest of the economy.The U.S. is likely to add fewer jobs this year than last -- about 1.6 million, compared with 1.8 million in 2011. That's an average of 135,000 net new jobs a month, but it has been a bumpy path, with monthly job gains above 250,000 in January and February slowing to an average of just 87,000 from April through July. The economy added a meager 96,000 net new jobs in August. The dawdling pace means hiring won't put much of a dent in the unemployment rate…8.1% in August.In fact, more bumps are possible this fall, as the so-called fiscal cliff approaches and private employers' doubts about the ability of Congress and President Obama to avert a calamity grow. If Washington fails to hammer out a deal averting scheduled tax hikes and huge automatic federal spending cuts scheduled to start in January, the economy will almost certainly fall into recession. Indeed, just the fear of failure will dampen hiring, though we continue to think that last-minute action in a lame-duck session of Congress will keep lower tax rates intact for most, if not all, taxpayers and at least defer big spending cuts until spring.Look for the jobless rate to end 2012 around 8%, not much less than it...
