Salient to Investors:

Joshua Shapiro at Maria Fiorini Ramirez

  • the US economy will grow 1.5 percent in 2013.
  • monetary policy is having a limited near-term impact on growth
  • the $1 trillion U.S. fiscal deficit is an important drag on future expansion.
  • adjustments that affect the economy are all very long-term and are not going to change anytime soon.
  • the federal budget deficit is a tumor that for now can be poked without killing the patient, but the longer we wait, the less that is likely to be the scenario..

Bruce Kasman at JPMorgan Chase said:

  • we’re forming a bottom, and the trajectory of the global economy is going to be only modestly higher because we’re getting very limited policy support in terms of monetary easing, and significant drag on the fiscal side, which is intensifying.
  • global growth will be 3 percent in 2013 as the European debt crisis eases as the ECB’s pledge to purchase bonds of distressed euro-area nations proves effective.
  • the U.S. will remain an island of lackluster growth.
  • China will rebound, but the need for structural reforms will prevent double-digit growth. China’s competitive position has been shifted by a number of years of pretty tight labor markets, and the government is not inclined to pump things up in a big way, and has real problems managing an overheated credit market and a falling housing market.
  • India is a concern because its government hasn’t supported, and hasn’t been supported by, investment from domestic and international sources.

Andreas Scheuerle at DekaBank Deutsche Girozentrale forecasts stagnation for the euro zone in 2013, which will focus on structural reforms, including banking. Anti-austerity parties in Italy may lure a substantial portion of the electorate in 2013 elections and undermine delicate agreements among the euro-zone nations to reduce debt and deficits.

Song Yu at Goldman Sachs says:

  • China needs government-led socioeconomic change to spur growth, including the loosening of the one-child policy to avoid burdening lone children with their elderly parents’ care.
  • His son’s generation may be the first in history in which the bulk of the population is only children born of only children.
  • Chinese economic data is becoming more reliable.
  • China’s society and economy is rapidly evolving.

Dean Maki at Barclays said:

  • China and the US share an aging population demographic.
  • the biggest single factor driving the unemployment rate lower in recent years has been the retirement of the baby boomers.
  • the unemployment rate is only dropping because discouraged workers have stopped trying to find jobs, so the view that we’re going to see a surge in the labor force participation rate any day now is an urban legend, something that people want to believe but has never actually happened in the past.

Maury Harris at UBS Securities says the return of discouraged workers will put upward pressure on the unemployment number.

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