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Economic Outlook For 2012: Not Rosy, But Optimistic

Despite our dysfunctional government, continuing debt issues in Europe, and a schizophrenic stock market, it doesn’t appear that we will have another recession in the next few quarters. In short, corporate earnings are just too strong for another recession. While unemployment and a weak housing market continues to plague the economy, companies continue cost reducing investments and if we can get some relief for the consumers in the form of lower gas prices and perhaps an extension of the payroll tax cut we should see some consumer strength going into 2012.

Granted, this assumes that our friends in Washington avoid making any substantial mistakes that could damage the economy (a big if) and that we don’t see a run-up in commodity prices (mainly oil and gas).

While there is plenty to worry about and the current economic numbers remain troubling, my outlook going into an election year foresees modest growth and continued improvement in the economy. Typically, we see economic improvement in an election year and without any negative legislation coming out of D.C., I remain cautiously optimistic going into 2011.