NEW YORK Next year might be a comparatively good one for the U.S. economy, according to Mickey Levy, chief economist at Charlotte, North Carolina-based Bank of America Corp.
Despite the long-run challenges and fiscal issues, I expect the United States to outperform this (coming) year. In 2013, people are going to say, Things feel better, Levy told attendees at the seventh annual Minor Metals Trade Association dinner in New York Wednesday.
The housing market could show particular strength. Fasten your seatbelt on housing; its going to roar back, Levy said.
The upcoming fiscal cliff, which has dominated the national conversation recently, will not have the major impact many expect, Levy said.
My expectation is there will be some compromise either before year-end or soon thereafter. Youll end up with a moderate amount of tax increases and a little bit of spending cuts. Well get over this hump, Levy said, adding that in his estimation businesses had already largely prepared themselves for higher taxes.
Itll come and go, but higher taxes wont have a negative impact on business activity, he said. However, he noted that they might have a slight negative affect on consumers.
In the long run, the country will need to address the ballooning budget deficit, Levy noted.
Someone asked me recently whether these budget issues are a ticking time bomb or a slow bleed. My answer is that theyre both, Levy said, explaining that a growing deficit could lead to instability in the financial markets and could crimp future growth.
He said that he expects little growth in the European economy over the next three years due to the fiscal issues there, but noted that the region's national governments have demonstrated enough commitment that the eurozone seems unlikely to disintegrate.
The chances of Europe coming apart at the seams (are) very, very low now, Levy said.