Wednesday, December 26, 2012

Do You Have (Economic) Bowl Fever?

While you are relaxing watching the Russell Athletic Jock Strap Bowl and the Located Some Bad Teams Compass Bowl, don’t forget about watching the economy and your investments in 2013.  To help you along, I am again making my “Economic Bowl Picks” versus my economic expert panel (the average of my seven favorite economists whose forecasts are published by the Wall Street Journal). Here is how I did against the panel for 2012 (the actual numbers are current estimates, but should not affect the final results):

Don
Panel
Actual
Winner
GDP
3.0%
2.3%
2.2%
Panel
CPI (Inflation)
2.3%
1.8%
2.2%
Don
Unemployment
8.2%
8.6%
7.8%
Don
Housing Starts
720K
674K
780K
Don
Crude Oil Price
$101
$95
$89
Panel

I'm closer on CPI, Unemployment and Housing Starts, so I’m doing a little victory dance celebrating my second straight 3 to 2 win!  Take note of how close the panels’ GDP forecast was.  You won’t get accuracy like that from those other economic blogs!  My GDP forecast was much too high for the second straight year.  I expected the government to “pull out all stops” to stimulate the economy in an election year because no incumbent president could ever be elected with economic growth so weak and unemployment so high. Uh, well it seems like the political indicators are malfunction as much as the economic ones. 

The 2013 forecast differences between the panel and I are much closer than normal this year which means I must be getting better or they are playing way to much golf!  For the record, I do make my forecasts before calculating the panel average: 

Here are the 2013 Economic Bowl Picks: 

The GDP Bowl: 

Minnesota Moderates vs. Rutgers Recession 

Line: Moderates by 2.2%  Range: 1.3% to 2.9% (The Line is the average of the expert panel.  The Range is the lowest and highest individual forecasts of the panel) 

The economy will start off at a very low rate of growth and then improve modestly all year.  We should be running at 3% by year’s end.  My Pick: Moderates by 2.3%  

The CPI Bowl (Consumer Price Index Bowl) 

Pittsburgh Pricers vs. Duke Discounters 

Line: Discounters by 2.1%  Range: 1.8% to 2.3% 

CPI was 2.2% last year.  There are few factors that should push this much in either direction.  This is why the FED can keep interest rates in check for another year.  I will move it up slightly just because I have GDP going up the same. My Pick: Discounters by 2.3% 

The Unemployment Bowl

Louisiana Laborers vs. Fresno Food Stampers 

Line: Stampers by 7.8%  Range 7.7% to 7.9% 

This statistic has been highly questionable for a year.  Just how many people are leaving the workforce and why?  The retiring baby boomers are a factor, but how much?  And then you have the underemployed and part-time worker/full-time seeker factor.  An economy growing at 2% should not generate enough jobs to reduce the current rate and that is why the panel is forecasting no change.  I am only slightly more optimistic. My Pick: Stampers by 7.6% 

Housing Starts Bowl
 
Arizona Allotments vs. Virginia Vacants 

Line: Allotments by 980,000  Range: 810,000 to 1,080,000 

The housing market is coming back and gaining momentum on a more consistent basis.  I (and the panel) am forecasting 25% growth in 2013.

My Pick: Allotments by 975,000 

Price of Crude Bowl 

Keystone Pipeliners vs. California Hippies 

Line: Pipeliners by $88 (year-end) Range: $80 to $94 

The price of crude (and gas prices) has dropped sharply in December and some experts say it could fall to $80 a barrel.  I think this is based on a weak U.S. and world economy.  By the end of 2013 I expect the U.S. economy to be rolling forward and hopefully the world economy is in better shape also.  My Pick: Pipeliners by $95.
Bet Big on the Pipeline!

Stock Market Prediction: 

The Model T predicted an S&P 500 Index high of 1435 in 2012 and the index peaked at 1474.  Being 2.7% low is not that bad; however in 2011 the forecast was 2.2% high.   

The Model T 2013 forecast is for a high of 1550, however for the first time since I have been writing this blog the Model T is signaling a definite peak to be followed by a correction.  I will present the details in the next post. 

I hope you made some good investments in 2012 and wish you a very prosperous 2013!

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