The economic horizon for 2012

One of the economic surprises this year was the flooding in Thailand. What can we predict on the horizon for 2012?

Steve Chiotakis: Today's the last stock trading day of the year. What happens by close of business -- or by the closing bell -- will cement the tepid, yet-improving economic conditions we've seen in the last year. So instead of going into too much detail about what kind of year it's been for the global economy, let's get a preview of what we could perhaps expect in 2012.

Jill Schlesinger is editor-at-large for CBS/MoneyWatch and she's with us live from New York as she is every Friday morning. Hey Jill.

Jill Schlesinger: Good morning.

Chiotakis: So we're wrapping up the year, and there were some signs of economic optimism in the last few weeks. What do those things say about the coming year?

Schlesinger: Well, you know, I'm looking back at the year, and I say: That was a really rough first half. I mean, growth was less than 1 percent. And yeah, you know, third quarter up -- 1.8 percent -- and maybe even the year ended strong at 3 percent, maybe even higher. But you know, I look ahead at 2012 and I'm looking at growth more like 2 to 2.5 percent. And you know, that's lower than a long-term growth rate for the country. So I'll take growth when it's compared to recession, for sure -- I just would like it be a bit stronger.

Chiotakis: A bit stronger. All right, so if the growth rate, Jill, is going be so modest, what does that say about the jobs picture? That continues to be the one thing that everyone's focused on, right?

Schlesinger: Yes. I think I'm going to use your mantra: tepid, but improving. That's what we can put in the jobs category. Weekly claims have been showing some improvement; it does bode better for next year. But again, with growth at 2 or 2.5 percent, it's really hard to see the impetus for employers to add a lot of new jobs. I suspect over the course of next year, the unemployment rate's going to drift a little lower -- maybe between 8 and 8.5 percent. But you know what? Historically, that's awfully high. And for the 13 million folks who are out of work, it ain't strong enough.

Chiotakis: You're absolutely right about that. And you know, it's amazing, Jill, the economy is interwoven, right? We talk about the growth rate and how that affects the jobs market. And if people can't get jobs then how are they, say, going to buy houses? Can the housing market recover?

Schlesinger:The housing market really is the epicenter, and that continues to be a problem. The market has essentially moved sideways to slightly lower -- from a very low level. Now here's the important thing to remember about housing: House prices doubled between the years 2000 and 2006. Seven years, doubling of prices was unprecedented. I think it's going to take about the same amount of time to for us to have  a full recovery, and that's putting us into 2013 or 2014 before we get to a more normal housing market.

Chiotakis: And quickly, Jill, these are all things we can easily see -- if not predict -- so what are the unknowns? What could really derail all of this?

Schlesinger:Obviously, events in Europe could cause great uncertainty. But that's the known boogeyman. I think the unknown one is the ones that maybe might catch us by surprise. Think back: Japanese earthquake and tsunami, Arab Spring, U.S. debt ceiling... something will surprise us next year.

Chiotakis: Jill Schlesinger from CBS/MoneyWatch. Jill, have a great weekend, happy New Year!

Schlesinger:Happy New Year to you.

About the author

Jill Schlesinger is editor-at-large for CBS/MoneyWatch.

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