Let's make some one year predictions about where the economy will be by December 31, 2013 - roughly one year from today.
I firmly believe that:
1) Unemployment rates will fall just below 7% from 7.7% as the economy picks back up.
2) New car sales will continue to build to more than 16 million cars per year, up from a recent record high of 15 million cars.
3) Stocks will end the year only slightly higher in 2013 than in 2012. Less than 10% returns are likely. Acquisitions will drive small cap stocks and we'll see a return of leveraged buy outs as cheap money and an improving economy encourage the obvious investments that need to be made by corporate executives.
4) Home sales will continue to rise as people go back to work, work on their balance sheets, repay debt, and realize that renting is a terrible proposition at the current price. Home sales will cross and sustain 5 million units per year.
5) Housing starts will reach and sustain a 900,000 annual rate, perhaps even 1 million annual starts per year, up from roughly 800k at present.
6) Hyperinflation will not happen.
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