Boiangiu Maria-Iulia,FB,Anul I,Gr.1 THE U.S. ECONOMY IN 2012 The U.S. economy will grow about 2.

3% in 2012, a bit faster than the 1.7% pace in 2011. Consumers are finally loosening the purse strings after four years of saving more to restore wealth lost in the housing crash and the 2008 stock market drop. Even those with sizable debt are now willing to dip into savings to buy essentials, including bigticket items such as cars when their clunkers reach the end of the road. Job creation is picking up, and businesses are investing in new equipment to expand production after several years of slowly increasing production to work off spare capacity. Fears of a severe financial crisis in Europe are lower. U.S. exports to Europe will get trimmed but not slashed as the recession there continues to shape up as mild and not severe. Finally, housing will be a small plus to the economy after subtracting from growth the past few years. Unfortunately, growth isn't accelerating as it normally does in a recovery. The economy grew at an annual rate of 2.8% in the last quarter of 2011, but the pace will slow again early in 2012 and pick up only slightly by the end of the year. A sustained recovery still is not under way, more than two years after the end of the Great Recession. And, of course, the economy remains vulnerable to possible shocks -- war, terrorism, an oil price spike or a natural disaster. One or more of these could tip the U.S. into another recession. There is little prospect of a major fiscal or monetary stimulus, or of any other development that might boost growth. The payroll tax credit, even if extended to last for all of 2012, merely maintains current tax rates. President Obama and the leading GOP presidential candidates have all indicated that they are opposed to more stimulus, at least during the election season. And a majority of Federal Reserve Board members oppose a major new monetary stimulus unless the economy worsens substantially. Hiring will pick up in 2012 but fall short of a robust recovery. The unemployment rate will end the year only a little lower than its 8.5% level in December 2011. That number is likely to tick upward a bit in the next few months as the speed-up in job creation lures more people into searching for work, and then fall very slowly for the rest of the year. The U.S. economy starts 2012 with momentum from 200,000 net new jobs added in December, above the monthly average for 2011 of 137,000. That pace is unlikely to be sustained in 2012, however. We expect job creation will average about 170,000 a month in the coming year, only a little faster than the workforce will grow. The good showing in December likely isnt the start of a surge. The labor market faces some high hurdles. Overseas growth is slowing in Asia, and Europe is sliding into a recession. In the U.S., housing demand remains weak, revenue-strapped local governments continue to lay off workers and businesses are slowing down their purchases of new equipment. As a result, gross domestic product will grow only about 2.3% in 2012, well short of the 4% or more that is typical in a recovery. The slow improvement in the job market will provide ammunition to both sides in the presidential election campaign. President Obama will point to a steady increase in

Boiangiu Maria-Iulia,FB,Anul I,Gr.1 jobs. His critics will say the pace is too gradual and hindered by regulation and misguided social policies. One key number to watch is private-sector employment, because it comprises the lions share of total jobs and recently the public sector has actually been cutting jobs even as the economy grows. We expect private employers to create a net 2.18 million jobs in 2012, while federal, state and local governments cut about 180,000 positions. One detail that took a little shine off Decembers report was a spike in the hiring of couriers and messengers, which accounted for 42,000 of the 200,000 new jobs, many times their normal contribution to job growth. This is probably due to hires not reported earlier in 2011 and temporary holiday hires that could disappear in January, but hiring was otherwise broadly distributed in different industries. Construction added 17,000, while manufacturing gained 23,000. Retail stores added 28,000, while health care payrolls grew by 23,000. Solid growth in business investment in 2011 will slow in 2012, as businesses show some caution in committing to putting money down on big-ticket items. This spending by business which comprises investment in buildings, equipment and software will grow by 6% in 2012, after expanding by 8% in 2011. Thats not bad in an average year, but it's a disappointing pace after the steep fall of the Great Recession, which slashed such investment by 19%. Even after a 17% gain in 2010, business investment is still running behind the level reached in 2007. Business spending of 6% in 2012 won't spur much hiring growth of 10% a year or more will be needed. We expect the economy will add about 150,000 jobs a month in 2012, short of the 200,000 or so needed to sustainably lower the unemployment rate. Some factors point to an improving business environment in 2012. The recent infusion of capital into the European banking system eases concerns about a global financial crisis. And Congress seems to be moving toward a full-year extension of the payroll tax cut, which would remove a cloud over consumer spending. Orders for durable goods those lasting three years or more surged at the end of 2011 and finished up 10% for the year. The rise of 4.1% in November and 3% in December will continue at a somewhat slower pace in 2012, but one promising sign for overall economic growth is that buyers of durable goods are adding to their inventories, a signal that they see stronger demand ahead. Moderate growth in the U.S. and a slowdown in most overseas economies spell lower inflation this year. Look for the Consumer Price Index to increase by only about 2% from December 2011 to December 2012, following a rise of 3% in the previous 12 months -- the largest annual increase since 2007. We expect the core CPI, which excludes food and energy, to match last year's rise of 2.2%. The key driver will be rents, which remain on the upswing. With unemployment high and job growth just so-so, there's been a falloff in homeownership in favor of renting, and it will take time for new job creation to shift the tide back to homeownership. Increases in prices of finished wholesale goods will also ease this year, climbing about 3% in 2012 after a 4.8% jump last year. The slower pace will result largely from more-sluggish global economic growth -- weighed down by a recession in Europe. Although an increase in wholesales prices can signal coming inflation for consumers, the weak economy means firms aren't able to pass along all of their increased costs.