Two recent interviews by Joe Weisenthal at Business Insider present optimistic views of the near future for the US economy. One is with Jan Hatzius, Goldman Sachs’ top economist (link). According to Weisenthal, “Hatzius is bullish on the U.S. economy starting in the second half of 2013, because finally he expects private releveraging to occur at a nice clip, and to not be counteracted by a fiscal drag.”
“If the business sector is basically trying to reduce its financial surplus at a more rapid pace than the government is trying to reduce its deficit then you’re getting a net positive impulse to spending which then translates into stronger, higher, more income, and ultimately feeds back into spending.”
“Since mid-2009, that surplus has gradually come down as businesses and households have gotten closer to where they need to be from a long-term balance sheet perspective. They’ve paid down debt, they’ve eliminated the excess supply of housing, and that’s basically allowed them to reduce the financial surpluses that they run. They’re still running large surpluses – still 5.5 to 7 percent of GDP, but they’re no longer as large. We expect those figures to come down as the balance sheet adjustment process makes further strides and that’s an underlying source of boost to the economy that’s happening on the one side.”
A second interview is with Bill McBride, author of the Calculated Risk blog (link). According to McBride, not only has the housing market bottomed, “housing is going to be [an economic] tailwind for some time.”
Both are interesting interviews and should be widely read.