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Thru a Glass Darkly: Al’s 2012 Economic Forecast

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Will we finally see the Economy improve here and around the country in 2012, and what will happen to our Investments, Homes and Jobs?

That’s the question on a lot of people’s minds around South Florida.

The answers will re-shape American Politics and the “Face” of Washington D.C. next Fall.

Wall Street should continue to see slow gains at least thru the first quarter of 2012. The 2011 Holiday Shopping Season will probably end up being better than expected, priming Billions of Dollars back into the economy and providing possible gains in full-time employment. But Market Uncertainty here and abroad may continue to make Investors nervous. So we will probably be seeing more volatility on Wall Street for possibly the first half of the year, if not even longer.  While the U-S Economic Recovery has a solid chance for continuing slow gains thru the First Quarter, European Markets can expect to be bounced around by continuing problems out the struggling National Economies of Greece, Spain and Italy.

As U-S Employment improves thru the 4th Quarter and possibly into the first half of 2012, Homeowners may have a better chance of catching up on their Mortgage Payments and avoiding Foreclosure Proceedings. But the current backlog of “Distressed Properties” will continue to choke the Courts and may still take a few years to filter thru the legal system.

Until then, South Florida Home/Condo Prices may continue to held-back from seeing many gains. But some Prime Properties are seeing stabilizing pricing and are expected to start seeing possible solid gains over the next few years.

Here’s a very good sign we can hope continues thru 2012: New Residential Construction projects are starting to break ground around South Florida. If the trend continues, it will go a long way to jump-start the stagnant Construction Market and in turn, boost local employment.

The latest Tourism Numbers for South Florida are showing solid gains over last year. Foreign Tourism is reportedly showing the best improvements. At the same time, Imports and Exports out of South Florida Ports are also seeing solid gains.

 2011 is expected to be a very good year for Foreign Trade and absent any major Global problems, there’s no reason to expect any slowdowns in 2012.

What does it all mean to Local Investors?

2012 should see some of the same problems holding back major gains on Wall Street.

Slow Job Growth will continue to dominate Investors’ Attention and probably drag down their optimism thru most of the first half of 2012. Consumer debt from the Holidays will come due the end of January and that could dampen further spending thru the First Quarter. Spending cuts will hurt retailers and pressure companies to cut back any remaining temporary employees come the end of January. The cycle could feed Investor’s fears of another Consumer Cut-Back in the 2nd Quarter of the Year. Don’t be surprised if we see more “Market Adjustments” as we approach the traditional “Summer Slowdown” after the Easter Travel/Shopping  Season.  

For local Investors, it all means “Tend Your Investments Closely”.  Double Check your Investment Blends between Savings, Stocks, Bonds and Insurance. Weigh and balance your “Risk Tolerance” and don’t afraid to rebalance your Investments.

2012 may not feel much better than 2011 as far as the Local and National Economies go.

In many ways, it may feel like there’s little improvement at all, since job growth will remain slow and salaries are barely keeping up with inflation.

But if you look hard enough, there are signs at the end of 2011 that some of the Economy’s problems are slowly improving. And hopefully they’ll continue thru 2012.

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