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The City Café

For those interested in sharing ideas and perspectives regarding local government.

ULCT economist Doug Macdonald shares some of the more interesting possibilities for the year to come.

1. The U.S. Housing Industry is set for a come back.  Housing supply is at a 4 year low.[i]  Prices climbed 2% in 2012.[ii]  Foreclosure rates are down.  Employment continues to slowly increase.  Mortgage rates are at their lowest rate in decades.

housingIHS Global Insight predicts a 27% increase in U.S. housing starts in 2013.  Utah’s Revenue

Assumptions Committee sees a 30% increase in Utah new dwelling permits and a commensurate 30% gain in residential permit values.[iii]  Expect at least a 15% growth rate.

2. Augmented “reality software” will use camera-equipped mobile devices so apps can take personal measurements, so clothes bought on line will fit, superimpose realistic representations of furniture in a consumer’s living room, and reviews and discounts when a mobile device is pointed at a store shelf.[iv]

3. The Chinese economy will pick up steam in 2013 to 8.6%.[v]  This will increase or, at least, steady commodity prices worldwide.  Leaders are being encouraged to focus on improving their own consumer spending instead of propelling exports.  Looser monetary policy and robust regional-government spending will boost their GDP.  Increased demand for commodities will be good for Pacific nation and Utah exports.

4. Smartphone apps will be increasingly recommended by doctors to monitor patients’ drug use, diets, and exercise regimens.  Guidelines from the Federal Drug Administration (FDA) will be closely watched.[vi]

5. Michael Porter and Jan Rivkin from Harvard’s Business School’s U.S. Competitive Project propose the following eight policy measures to “transform” our economy: porter rivkin1) Ease immigration of highly skilled foreign college graduates, 2) Simplify the corporate tax code by cutting loopholes and lowering the rate so that less profits stay overseas, 3) Tax overseas profits only where they are earned, 4) Address trade distortions to open consumer markets in emerging economies and protect our intellectual-property rights, 5) Simplify regulation, by regulating more intelligently and employ more rigorous cost-benefit analysis, 6)  Enact a multi-year program to improve infrastructure.  “America’s roads, ports, telecoms and energy infrastructure fail to match the world’s best.  7) Agree on a framework for developing oil and gas from shale.  8) Create a sustainable federal budget.  We need to get on a structurally sustainable growth path for both revenues and expenditures.[vii]

6. FDA will also be asked to approve the digital pill, including digestible microchips.  Powered by stomach acid the tiny chips relay data to nearby wireless devices, recording information on when they were taken.[viii]

7. The “fiscal cliff” will be bridged, and after a bumpy start the economy will continue to recover.[ix]  “The process will be fraught with false starts, recriminations and at least one downgrade of America’s debt rating.  the economistThe final product will be a contraption of trade-offs and murky accounting.  Business will not get the cathartic resolution of political uncertainty it longs for, but at least the perpetual threat of fiscal Armageddon will recede.”[x]  Let’s hope it is not that bumpy.

[ii] The Economist, “The World in 2013”, p. 43.

[iii] Utah Governor’s Office of Planning and Budget,

[iv] The Economist, p. 122.

[v] Robin Bew, The Economist, p. 22 and IHS Global Insight, “Top 10 Economic Predictions for 2013,

[vi] The Economist, p. 120.

[vii] The Economist, p. 50 and

[viii] The Economist, p. 122.

[x] Greg Ip, The Economist, p. 43.


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