Forecasters See Small Pickup in Growth for 2012

JoblessLOS ANGELES (AP) - A new economic forecast calls for the U.S. economy to make some modest growth strides this year, but not quite enough to significantly reduce the number of jobless Americans looking for work.

About two-thirds of the economists who participated in the latest National Association for Business Economics survey expect the nation's gross domestic product, or GDP, to grow at a rate above 2 percent this year, according to the outlook released Monday.

GDP reflects the economy's total output of goods and services. The latest forecast is in line with one issued by the group in November that called for the economy to grow 2.4 percent this year.

"That is not the sort of GDP growth that's really going to dramatically improve our labor market, but it's certainly not going to make it worse," Nayantara Hensel, professor of industry and business at National Defense University and chair of the NABE survey, said in an interview.

GDP growth needs to be above 3 percent to significantly lower unemployment, which is at its lowest rate in nearly three years, but remains at a troubling 8.5 percent.

The NABE economists previously forecast growth of 1.8 percent for all of 2011. Final GDP numbers for the last three months of 2011 are due out Friday.

The recent improvement in the unemployment rate, a pickup in retail sales during the holiday season, and hopefulness that Congress will be able to reach a debt reduction deal, are among the factors behind the rosier GDP outlook among better than 60 percent of the survey respondents.

Almost two-thirds of respondents said they expect no change in employment, the highest share of survey participants to hold that view in recent quarters. And the share of those who expect hiring to pick up in the next six months declined to 27 percent from 29 percent in the previous survey.

That doesn't bode well for new job growth, but it also suggests employers don't expect to slash payrolls further.

A majority of the respondents said wages and salaries are unchanged, while nearly all expect either no change in prices or increases by their companies of 5 percent or less.

The holding pattern on prices could reflect a caution on the part of businesses due to uncertainty in the economy, given the burgeoning debt crisis in Europe, rising tensions with Iran and the potential for higher oil prices, Hensel said.

On the sales front, about 81 percent of the survey participants, which include some company managers, said sales were either unchanged or rising along with profit margins. But 19 percent said sales were falling.

Some 63 percent of the NABE forecasters on the panel expect that there will be no impact from the European debt crisis on sales over the next six months. While about 29 percent reported sales fell 10 percent or less due to the region's lingering debt woes.

The survey was conducted between Dec. 15 and Jan. 5. It is derived from responses given by 63 NABE members

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The Iraq war provides a good example. Until November 2000, no OPEC country had dared to violate the US dollar-pricing rule, and while the US dollar remained the strongest currency in the world there was also little reason to challenge the system. But in late 2000, France and a few other EU members convinced Saddam Hussein to defy the petrodollar process and sell Iraq's oil for food in euros, not dollars. In the time between then and the March 2003 American invasion of Iraq, several other nations hinted at their interest in non-US dollar oil trading, including Russia, Iran, Indonesia, and even Venezuela. In April 2002, Iranian OPEC representative Javad Yarjani was invited to Spain by the EU to deliver a detailed analysis of how OPEC might at some point sell its oil to the EU for euros, not dollars.

This movement, founded in Iraq, was starting to threaten the dominance of the US dollar as the global reserve currency and petro currency. In March 2003, the US invaded Iraq, ending the oil-for-food program and its euro payment program.
There are many other historic examples of the US stepping in to halt a movement away from the petrodollar system, often in covert ways. In February 2011 Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF), called for a new world currency to challenge the dominance of the US dollar. Three months later a maid at the Sofitel New York Hotel alleged that Strauss-Kahn sexually assaulted her. Strauss-Kahn was forced out of his role at the IMF within weeks; he has since been cleared of any wrongdoing.

War and insidious interventions of this sort may be costly, but the costs of not protecting the petrodollar system would be far higher. If euros, yen, renminbi, rubles, or for that matter straight gold, were generally accepted for oil, the US dollar would quickly become irrelevant, rendering the currency almost worthless. As the rest of the world realizes that there are other options besides the US dollar for global transactions, the US is facing a very significant - and very messy - transition in the global oil machine.

January 29 2012 at 5:58 PM Report abuse rate up rate down Reply

The "petrodollar" system was a brilliant political and economic move. It forced the world's oil money to flow through the US Federal Reserve, creating ever-growing international demand for both US dollars and US debt. The petrodollar system spread beyond oil: the majority of international trade is done in US dollars. That means that from Russia to China, Brazil to South Korea, every country aims to maximize the US-dollar surplus garnered from its export trade to buy oil.

As oil usage increased in the 1980s, demand for the US dollar rose with it, lifting the US economy to new heights. But even without economic success at home the US dollar would have soared, because the petrodollar system created consistent international demand for US dollars, which in turn gained in value. A strong US dollar allowed Americans to buy imported goods at a massive discount - the petrodollar system essentially creating a subsidy for US consumers at the expense of the rest of the world. Here, finally, the US hit on a downside: The availability of cheap imports hit the US manufacturing industry hard, and the disappearance of manufacturing jobs remains one of the biggest challenges in resurrecting the US economy today.

There is another downside, a potential threat now lurking in the shadows. The value of the US dollar is determined in large part by the fact that oil is sold in US dollars. If that trade shifts to a different currency, countries around the world won't need all their US money. The resulting sell-off of US dollars would weaken the currency dramatically. GOT GOLD?

January 28 2012 at 6:25 PM Report abuse rate up rate down Reply

Tehran Pushes to Ditch the US Dollar

India and Iran are negotiating deal to trade oil for gold. Does this matter, you ask? It strikes at both the value of the US dollar and today's high-tension standoff with Iran.

Officially the US & EU is Tehran must be punished for efforts to develop a nuclear weapon. Sanctions on Iran's oil exports meant to isolate Iran and depress the value of its currency to a point that the country crumbles.

Sanctions will not achieve their goals. Iran is far from isolated and its friends - like India - will stand by the oil-producing nation until the US backs down or acknowledges the real matter the American dollar as the global reserve currency.

In the 1970s a deal cemented the US dollar as the only currency to buy and sell crude oil, and from that monopoly on oil trade with the US dollar as the reserve currency for global trades in most commodities and goods. Massive demand for US dollars ensued, pushing the dollar's value up. Countries stored their excess US dollars savings in US Treasuries, giving the US government a vast pool of credit.

If the US dollar loses its position as the global reserve currency, the consequences for America are dire. The dollar's valuation stems from its lock on the oil industry - if that monopoly fades, so too will the value of the dollar. Global fiat currency relationships will change. Gold will rise. Uncertainty around paper money always bodes well for gold, and these are uncertain days indeed.


January 27 2012 at 10:39 AM Report abuse rate up rate down Reply

O'Blabber's Marxist,Socialist,Communist Ideas are getting kicked to the curb in November. Good riddance !!

January 24 2012 at 10:58 AM Report abuse +1 rate up rate down Reply

The slow but steady economic recovery that started the day Obama was sworn in, and a centrist group of adults replaced the right wing frat boys of the dubya "administration," continues, despite the best efforts of the GOP garbage infesting Congess to prevent any progress - in fact, trying to restore the depression the GOP's spectacular failures created in the first place.

January 24 2012 at 10:45 AM Report abuse -1 rate up rate down Reply
3 replies to gopispoison666's comment

Same OLD, tired, libtard, LIE! Always with the single digit growth. Real inflation is over 15% and rising. This means we spent more to get LESS! That’s called CONTRACTION to all non kool aid libtards!

January 23 2012 at 3:41 PM Report abuse rate up rate down Reply
1 reply to Mike's comment

The usual complete nonsense. Because the economy isn't crashing as the lunatics you follow predicted, you claim an outrageous inflation level. There are products that are increasing in price, such as food, as a result of world market conditions, not monetary and fiscal policy, but overall, the depressed housing prices, due to the bubble popping, and the overall slow economy, due to the utter failure of the right wing policies of tax cuts for the rich and deregulation of business, are keeping price increases in check.

Petroleum products are going to go up long term for three reasons, none of which have anything to do with monetary or fiscal policy: First, the latest number are showing that we are either very close or past "peak oil." Second, the USA is showing no signs of cutting its profligate use of oil and especially gasoline. Third, China is going car crazy and picking up the same nasty habit.

Get a grip on reality, and stop listening to the gloom and doom idiots on a mission from God to scare the bejezzus out of everybody so their gold investments do well.

January 24 2012 at 10:41 AM Report abuse -1 rate up rate down Reply
1 reply to gopispoison666's comment

bla bla bla bla bla bla bla bla bla bla bla bla BLA BLA BAL bla bla bla BLA BLA BLA BLA BLA .

O'Blabber is the reason for the nation's insanity. All his economic policies are failures while he figures out more ways to destroy the nation.

January 24 2012 at 10:51 AM Report abuse +2 rate up rate down

with gas prices going up 30 cents in 3 weeks time.................not going to happen ..............back to the same old same old!!!!!!!!!!!!!

January 23 2012 at 1:00 PM Report abuse -1 rate up rate down Reply