“One of the big themes of 2013 is the end of the US economic crisis.
That’s not to say that the economy is incredibly strong (GDP growth remains mediocre and unemployment is too high) but several of the key conditions that characterized the financial crisis, and the ensuing years, are starting to fade.
The household deleveraging process, for example, is almost done. That’s coinciding with a beginning of real interest rate normalization. In financial markets, we’re seeing an end to the risk-on-risk-off situation, and more dispersion among stocks.
One of the first firms to jump on board this idea was Goldman, which made its big call that things would start to normalize in 2013, particularly the back half (and now Goldman thinks it’s possible that it’s happening already).
Others have jumped on board too.
In a new note, Morgan Stanley‘s Vincent Reinhart talks about the coming inflection point for the US economy, and he also talks about the change coming in the second half of the year.
In the Morgan Stanley forecast for the US, the trajectory of economic activity marks an inflection point midway through 2013. The severe financial crisis of 2008-09 necessitated significant downward adjustments by the private sector to the levels of aggregate demand and efficient supply. As the event recedes further into history, however, the drag on growth from these ongoing level adjustments plays out.
In our forecast, the expansion of real GDP steps up to around 2-3/4 percent in the second half of this year and beyond….”
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