The year 2012 was a difficult one for many Americans. The implications of the global financial crisis created severe economic hardships that were exacerbated by the growing levels of unemployment in the country. With the economy on the brink of catastrophe, a large number of American consumers were forced to cut back on their spending and were unable to repay their debts. As a result, the proportion of bad loans rose to alarming levels, placing the banking industry under tremendous pressure to improve its operations and financial performance.
America’s Economic Outlook for 2013
This year, despite the previous year’s efforts to reverse the trend, there are no positive signs that the country will soon recover from the clutches of the slowdown and achieve modest economic growth. The global outlook for 2013 is somewhat less optimistic and the vast majority of the consumers foresee broader economic problems ahead. In fact, according to a recent Gallup poll, 65 percent of US residents believe that 2013 will be a year of financial complexity and challenges while only 33 percent of the selected respondents expect greater economic prosperity this year. This increase in consumer pessimism only shows that consumers no longer anticipate an immediate improvement in their future income and job prospects. Several other questions were also asked in the survey. The results suggest that 57 percent of Americans believe that American power and global influence will decline in 2013. On the other hand, a vast majority of the respondents, 82 percent, anticipate that taxes will increase during this year.
Unfortunately, this outlook is shared by many US economists and organizational leaders. The financial hardships felt by many Americans as an outcome of the downturn that has shaken the economy for the past couple of years are expected to continue in 2013. This means that US consumers will have to stretch their finances to pay for increased grocery expenses, rising medical costs, higher tax rates, and other expensive services. Given that economic spending accounts for two-thirds of the nation’s activity, these skyrocketing costs could put more strain on the already struggling economy. If the prices of basic commodities such as food, medicine and fuel will continue to soar to unaffordable levels, there is a greater possibility that low and middle-income households will struggle to make ends meet as wages have remained relatively flat. These issues are now causing a number of households to become more cautious about their spending behavior and retirement saving strategy.
But the scope of the looming crisis does end there. Bruce McClary, a spokesperson for Clear Point, a non-profit credit counseling agency, noted that people are also getting more worried about the changes that might be happening with their income tax, that they are going to have less disposable income to work with.
A team of economists at JPMorgan anticipates that household spending and the state’s gross domestic product will decline significantly following the expiration of the temporary two-percentage point payroll tax cut.
In order to fight these economic woes, US lawmakers are urged to take immediate actions to minimize the impact of scheduled tax rate increases and spending cuts. Unless the government takes affirmative efforts, the condition of the economy is almost certain to get worse.