Noted area economist offers solid forecast for 2013
Johnson expects growth, more new jobs for Capital Region
Updated 9:39 p.m.
COLONIE Worry over what Washington will do about the so-called fiscal cliff, and not underlying economic indicators, is helping weigh down financial markets, Albany economist Hugh Johnson told a gathering Thursday morning.
Indicators that ordinarily signal an ongoing recovery continue to be solid, Johnson said, despite a decline in the stock market since Sept. 14.
“I’m very strongly inclined to dismiss the performance of the financial markets since Sept. 14 and to conclude that indeed the economy will continue to expand for the remainder of 2012 and 2013,” Johnson said.
The reason Johnson said he believes investors have turned cautious is because of their concerns over fiscal policy in Washington. Johnson said he believes politicians in Washington will take action to prevent the tax hikes and spending cuts of the fiscal cliff from happening.
Johnson, chairman and chief investment officer of Hugh Johnson Advisors, gave his annual economic forecast at the Albany-Colonie Regional Chamber of Commerce meeting at the Marriott.
Johnson has more than 40 years of investment experience and is nationally recognized for his forecasts of the economy, interest rates and domestic equity markets. He appears regularly on television news programs to provide market insight and is frequently quoted in major news publications such as the Wall Street Journal and the New York Times.
Johnson touched on a variety of economic topics Thursday, including the fiscal cliff and both the local and national economic forecast.
New York state’s economy goes as the national economy goes, Johnson said. He sees the state economy expanding at a rate of 2.3 percent this year and 2.0 percent in 2013.
Other economic numbers for the Capital Region are good, as well, Johnson said, with the region seeing a rise in the growth rate. That rise isn’t necessarily seen in Schenectady, Albany and Rensselaer counties but is seen in Saratoga County with “really good” numbers.
Employment growth will continue to be positive, but come down a bit from 2012 numbers, Johnson said. Johnson sees a slight decline nationally and in New York state, but steady numbers locally.
By the end of 2013, Johnson believes 6.1 million of the 8.8 million jobs lost during the financial crisis will have been recovered.
The recovery, though, is not a normal one, he said. Normally, the economy would have recovered all of the jobs and added another 8.8 million. The reason for that, he said, is an extended period of the economic cycle where businesses and consumers are paying down debt.
But the market’s performance in recent months is not a good indicator of where it will be in 2013, Johnson said. He sees no significant imbalances or pressures on the Federal Reserve to raise interest rates, no tightness in the labor markets and no tightness in the capital markets.
He said he sees the Federal Reserve as being responsive to economic conditions, and there will be a deal on the fiscal cliff.
“Generally speaking, I think we’re headed toward a positive 2013, but it won’t be an exciting 2013.”