By Dees Stribling, Contributing Editor
The International Monetary Fund, in an update to its World Economic Outlook released on Wednesday, said that global economic growth will strengthen in 2013. But the pace will be slow, and the IMF emphasized that certain downside risks remain for the world economy, such as continuing stagnation in the eurozone or a misstep by Congress.
Still, the good news is that the IMF has revised its forecast for global economic growth this year to 3.5 percent, compared with a prognostication of 3.2 percent back in October. A number of factors are pulling the global economy forward, the organization says, such as that the recovery in the United States remains more-or-less on track, and that the euro zone might not explode after all. Japan’s stimulus plans will help boost growth in the near term, pulling that country out of a short-lived recession, and other effective policies in other places are supporting a modest economic pickup in some emerging markets and developing countries.
The IMF forecasts growth of 2 percent in the United States this year, more-or-less unchanged from its forecast in October. The turnaround in the U.S. housing market will be a major factor in supporting the growth of consumer spending (people with houses tend to want to fill them up with stuff, after all). To keep the U.S. economy growing, the IMF said that “the priority is to avoid excessive fiscal consolidation in the short term, promptly raise the debt ceiling, and agree on a credible medium-term fiscal consolidation plan, focused on entitlement and tax reform.”
Architects Billing More
Business conditions at architecture firms continue to improve, according to the American Institute of Architects, which released its latest Architecture Billings Index on Wednesday. As a leading economic indicator of construction activity, the index reflects roughly a nine- to 12-month lag time between architecture billings and construction spending.
AIA reported the December index stood at 52.0, down from 53.2 in November. Still, the score reflects an increase in demand for design services, since any reading above 50 indicates an increase in billings. The December new projects inquiry index was 59.4, down slightly from its 59.6 mark during November.
“While it’s not an across-the-board recovery, we are hearing a much more positive outlook in terms of demand for design services,” AIA chief economist Kermit Baker said in a statement. “Moving into 2013, we are expecting this trend to continue and conditions improve at a slow and steady rate. That said, we remain concerned that continued uncertainty over the outcomes of budget sequestration could impact further economic growth.”
House Votes to Suspend Debt Ceiling
As expected, the House of Representatives passed a bill to “suspend” the debt ceiling for three months, meaning the federal government can borrow the money it needs to meet its commitments through the spring, if the measure is passed by the Senate and signed by the president, also as expected. The vote was 285-144, and not all of the Republican caucus went along with it, with 33 members of the party voting nay. Next stop: a fracas over sequestration in March.
Wall Street had a modest up day on Wednesday, with the Dow Jones Industrial Average up 67.12 points, or 0.49 percent. The S&P 500 saw a 0.15 percent uptick and the Nasdaq gained 0.25 percent, even though Apple dropped on a flat earnings report (despite the fact that it saw a profit of $13.1 billion for the most recent quarter).