Though many optimists now believe that a combination of lower oil prices, rising auto sales, recovering house prices, and a resurgence of U.S. manufacturing can refuel America’s economic recovery, the reality is the opposite: For five key reasons, the U.S.’s economic growth will slow further in the second half of 2012 and be even lower in 2013 – close to stall speed. NEW YORK – While the risk of a disorderly crisis in the eurozone is well recognized, a more sanguine view of the United States has prevailed. For the last three years, the consensus has been that the U.S. economy was on the verge of a robust and self-sustaining recovery that would restore above-potential growth.
That turned out to be wrong, as a painful process of balance-sheet deleveraging – reflecting excessive private-sector debt, and then its carryover to the public sector – implies that the recovery will remain, at best, below-trend for many years to come. Even this year, the consensus got it wrong, expecting a recovery to above-trend annual GDP growth – faster than 3 percent. But the first-half growth rate looks set to come in closer to 1.5 percent at best, even below 2011’s dismal 1.7 percent. And now, after getting the first half of 2012 wrong, many are repeating the fairy tale that a combination of lower oil prices, rising auto sales, recovering house prices, and a resurgence of U.S. manufacturing will boost growth in the second half of the year and fuel above-potential growth by 2013.