12 Predictions for 2013

Clarity Moving Beyond the Past

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 ~ The best part of 2013 is that there won't be a federal election. Consequently, some useful things will get done. There will still be way too much partisan malarkey for my tastes, but the electorate expects action on a host of things and the political dynamic will allow more progress than last year's gridlocked, posturing debacle.

This year's predictions:

1. John Boehner will retain the Speakership. For most of his tenure, and especially in recent weeks during the tedious maneuvering around the so-called fiscal cliff, Boehner has looked feckless and unable to lead his own caucus. It's not clear that anyone can lead that dysfunctional group, however, and Boehner is personally popular among his colleagues. The talk of his being replaced is just talk.
2. Far-reaching tax reform will pass. The squabbling and brinksmanship on taxes and spending will continue unabated for months. Congress will pass a succession of band-aids, but some kind of bargain (I don't dare call it grand) will be reached by summer. While no one can know the details yet (and much will depend on how much President Obama negotiates with himself) I expect fewer tax brackets, the elimination of a whole bunch of deductions and credits and an unnecessarily draconian "reform" (i.e. slashing) of the social safety net.
3. The US economy grows stronger. I haven't heard anyone talking about double-dip recessions in quite a while. Economic fears are a hardy perennial, but we seem to be climbing a wall of worry. In some respects, all the fretting keeps expectations low and the snail-like improvement is more sustainable. I wouldn't be surprised if Obama serves out the rest of his term without a recession.
4. Unemployment will continue to inch down. Below 7% at year-end.
5. The Euro will survive. Again.
6. The Chinese bubble will burst. I said this last year and am going to repeat it again this year. Slowing growth, too many moving to the cities, rampant environmental damage, and re-shoring of manufacturing (or off-shoring to cheaper places) will all make successful central planning harder to achieve. China's growing middle class seeks many of the same things that middle classes everywhere want, and the economic, social and political challenges to Chinese leadership will be intense.
7. Federal energy policy will continue to go nowhere. Anything good that happens will be at the state level, and there will be support in places, especially as the levelized cost of wind continues to decline and solar reaches grid parity.
8. US government support for cleantech all but disappears. There will be a few token gestures, perhaps including another brief extension of some kind of production tax credit, but meaningful steps will be sacrificed on the fiscal altar.
9. The Keystone XL pipeline will be allowed to go ahead. Obama cherishes his own notion of being a centrist, and this is the perfect way to show he won't be dictated to by his base. Of course, his opponents will give him no credit for doing so.
10. Problems with fracking become more apparent. In particular, we will see more instances of fracking chemicals (or methane) showing up in water supplies. Also, more will notice that fracking wells have much shorter periods of profitable production than conventional ones.
11. Oil will stay below $120/BBL and gasoline will hover around $4.25/gallon all year.
12. The smart grid will still not be built. Still. In fact, we'll hardly build any infrastructure at all.

Best wishes for a healthy, happy and prosperous 2013 to my friends, family, clients, colleagues and both of my readers.