1) Global growth will prove to be relatively anemic (2-3% at best), as a slowdown in China and India, as well as the rest of the Southeast Asian quadrant will not generate the near double digit economic growth seen in the past few years. Further weakening the development of economic expansion will be the overhang of a dispirited European Union Community, almost totally dependent on a financial bailout from Germany. Japan is on a remarkable comeback trail, with an unexpected strengthening of the yen, considering the earthquake/tsunami and nuclear problems it has experienced.
2) Inflation will increase costs of cheap products emanating from China and India, as these two giant nations comprising 2.5 billion of the world's 7 billion population are substantially increasing labor costs to keep their fast-growing people quotient from becoming restive. This will also affect costs of American companies with Chinese-based facilities.
3) Although the pricing of such commodities as oil, copper, iron ore, gold, silver, and rare metals will be reasonably contained due to slackening demand, expect geo-political disturbances to become a potential sidewinder in the Middle East and North Africa, which provide one-half of the world's oil. With U.S. troops out of Iraq, Iran will likely move to extend its influence and domination over its Arabic neighbors, especially Iraq. This would give Iran control over nearly one-fourth of the world's oil production. If such a political tidal wave were to extend over a defenseless Saudi Arabia, Iran would call the shots in OPEC's global pricing internationally.
4) This puts America's energy development into an even more critical perspective as the following government-controlled decisions come into play:
A) The Canada/American oil pipeline must be given the go-ahead by the "Oval Office" by year's end. This would not only potentially transmit 4 million barrels a day of unrefined crude by 2020 to U.S. refineries in the Houston area, and along the Louisiana Gulf Coast, but would, within months, put up to 30,000 unemployed construction workers back to work.
B) The revolutionary fracking technology, which has broken out in the Marcellus Range (Pennsylvania and New York) and the Bakken Belt (North Dakota and Montana), and West Texas could eventually cover most of the U.S., including federally-owned lands in the Rocky Mountains, which are now off-limits. Such a fracking expedient would cut America's 12 to 13 million domestically-produced barrels per day oil shortfall in half, as well as developing a huge surplus of natural gas. This would make the U.S. a liquid natural gas exporter, further curbing the trade deficit and adding to exports, which already comprise 12% of the U.S. gross domestic product.
The outlook for America's 2012 growth, slightly less than that mirroring the world as a whole (2% at best), is dependent on the following circumstances.
C) A strong restraint on the antics of the Environmental Protection Agency must be implemented. This extremist organization, headed by activist Lisa Jackson, has threatened the shutting down of fracking, and the prohibition of the Canada/U.S. oil pipeline. It appears that the President will stay the hand of the climate control-absorbed federal agency from wrecking energy growth due to the negative impact this would have on his reelection campaign.
The overall U.S. economy will not substantially improve its current momentum, which is now just above recession levels for the following continuous reasons:
1) Independent businesses, which control two-thirds of the hiring of 150 million potential workers, will not increase their employment rolls. Hanging over their heads are financially strangulating regulations such as Sarbanes-Oxley, Frank-Dodd, and the upcoming Obamacare healthcare incubus, which is already generating enormous health cost increases. Fear of further government restraints on bank lending and perceived anti-business hostility is keeping record trillions of dollars locked in the vaults of these companies and banks
2) The residential construction industry will remain at depression levels, as home owners are switching from purchasing to rentals. Existing home sales are running at less than half the pre-recession levels and a third of these are foreclosures. This, however, has spurred rental apartment building, both urban high rises, as well as conversion of condominiums and condos. Even suburban and rural areas have switched into the individual home surge for rental occupancy.
3) There seems to be little demand for office buildings, shopping malls, or a major increase in institutional construction. Only healthcare-oriented expansion, such as hospitals, assisted living residences, and out-patient providers are emanating positive vibes. Unemployment will continue to hang in at the 9% level, with those not working full-time numbering twice as much.
4) Retail will likely witness a substantial on-line purchasing increase. This will cramp the style of shopping centers, which will also see a great influx of business at the discount store level, reducing demand for luxury discretionary purchases.
Major changes in the nation's economic direction will have to await the November 6, 2012 general elections. For all intents and purposes, Obama's Jobs Act and its components appear dead on arrival. Also, the "Gang of 12" Congressional team, due to report after Thanksgiving, will likely not come up with meaningful solutions for the ongoing multi-trillion dollar budget deficit, triggering arbitrary annual cost-cutting.
