Economic predictions for 2013

Since this is a PF (Personal Finance) type blog, I thought I’d make my own 2013 predictions.

I started this blog toward the end of 2012 and it seemed rather silly to bother making predictions since most of the year was already gone.

I know that I mentioned on several other blog posts that the 2% payroll tax holiday for Social Security would go back up to 6.2% for the individual. I was quite glad it was kept for 2 years as I simply diverted that much more funds into my 401k immediately when the legislation was signed into law – and I sincerely hope that everyone else took advantage of that if they were able.

  1. DJIA up 6.7% – I think they’ll maintain a steady growth, but believe that the stock market folks are trying to control this index so that there isn’t such a large growth in too short of a time
  2. NASDAQ up 18.5% – I believe this will go up close to another 20% because of the technology that is becoming readily available and the ease of stock transactions. I also believe that people are not as afraid of the tech sector anymore because it is not at the huge growth that it did right around the time of Y2K occurring.
  3. S&P 500 up 8.4% – I believe this will continue it’s climb as well. At least until the government spending spree continues
  4. Housing will still maintain gains since the government is still overly funding it by keeping the mortgage rates at all time lows courtesy of Uncle Ben Bernanke.
  5. The economy will still trod along slowly for the bulk of the year, taking it’s largest uptick toward the beginning of the 4th quarter due to additional spending that will come as the holidays approach.
  6. The savings rate while ridiculously low as Sam would say, will see an increase again since the U.S. citizens are beginning to realize that they need to save for a bad times. I believe that the unemployment rates, will go up a little in the beginning of the year since more people will be in/out of lower paying jobs just to make sure that they make ends meet, but that they will be back down to 7% by the end of the year. I’m hoping that people will increase their savings rate up to at least 25% of their income, NOT counting any retirement account contributions.

Those are my own personal predictions, do you have any that you agree or disagree with? If you think I’m way off base, please feel free to let me know that you think I’m a little off my rocker. :-)
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FYI, the Bureau of Economic Analysis (BEA) has mentioned in this posting that the personal savings rates as a percentage of disposable income is 3.6%. This is still arguably low since we really should be setting the percentage of disposable income for us up higher.
For instance, according to the linkabove percentage of disposable income was at 0.6% in Nov 2012. Since the the savings rate they also mentioned in the article is 3.6% of that amount, which would be a very low amount of 0.21% of income.

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