Tags: Chan | stars | align | recovery

JPMorgan’s Chan: US Economy Is ‘Starting to See the Stars Align’

Tuesday, 08 Jan 2013 08:13 AM

By Michelle Smith

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The American economy is not likely to witness a miraculous turnaround, but many financial experts are expecting an improvement in 2013.

Many Americans will continue to face challenges, such as rising costs of living, wages that fail to keep pace and stubbornly high unemployment rates.

The new norm will be the same as the old norm for most households, according to The Des Moines Register.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

But, that does not necessarily mean that the annual forecast is all gloomy.

The Register notes that several experts predict the economy will shift into higher gear in the second half of the year due to improving home and auto sales and rising home prices.

Some people will still find it difficult to access attractive mortgage rates, which are now at historic lows, but the housing market is nonetheless expected to be a bright spot in the economy.

According to analysts and economists surveyed by Bloomberg, US housing sales and prices are poised to rise in 2013, solidifying a recovery that began last year after a five-year slump that was the deepest since the Great Depression.

Purchases of new single-family houses are expected to rise 23 percent to 448,000 this year, extending last year’s rebound from a record low 306,000 in 2011, says Bloomberg.

“Increased new residential construction activity will lead to employment gains, which should translate into higher consumption and modest [gross domestic product] growth,” Robert Wetenhall, a homebuilding analyst with RBC Capital Markets, tells Bloomberg.

"It's going to take awhile for the U.S. economy to recover, but we're gaining momentum," said Anthony Chan, chief economist at JPMorgan Chase & Co.'s private wealth management unit, The Register reports.

"We're starting to see the stars align in a way that is consistent with improvement in consumer markets. Main Street America really benefits from higher home prices, because they have a bigger chunk of their household balance sheets in housing," he adds.

“We think the reasons that spurred the 'new normal' idea are coming to an end," Bob Baur, chief global economist at Principal Global Investors, tells The Register.

"The underlying fundamentals of the U.S. economy are probably better than people realize."

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

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