by Calculated Risk on 11/30/2012 08:25:00 PM

To end the week on a slightly upbeat note, here is a multi-year forecast from Goldman Sachs economists Jan Hatzius and Sven Jari Stehn: The US Economy in 2013-2016: Moving Over the Hump. A couple of excerpts, first on next year:

We expect US economic growth to remain below 2% in the first half of 2013. The step-up in the pace of fiscal retrenchment is likely to outweigh the healing in the private sector and the bounce-back from the disruptions associated with Hurricane Sandy. The risk to our forecast is tilted to the downside; a full fiscal cliff outcome would likely result in renewed recession.   ... But ... growth is likely to improve starting in the second half of 2013.
emphasis added

And over the next few years:

The key theme of our 2013-2016 economic forecasts is the “great race” between recovery in the private sector and an offsetting contraction in the government sector. ... Beyond 2013, however, we see a pickup to an above-trend growth pace as the fiscal drag abates to ½%-1% of GDP. ...  the private sector is likely to deliver an impulse of around 1½ percentage points to real GDP growth in 2014-2015. Even with a continued drag from fiscal policy, this should result in solidly above-trend growth of 3% or a bit more. This would still not be a very rapid recovery by the standards of past cycles, but it would be clearly better than the 2%-2½% seen in the recovery so far.

Goldman sees housing starts at a 900 thousand annual rate in the first half of 2013, and around 1 million in the 2nd half of next year  They are forecasting new home sales at around a 400 thousand annual rate in the 1st half, and picking up to close to around 500 thousand (annual rate) in Q4. Not mentioned in the note (I was on the conference call earlier), the Goldman forecast for the S&P500 is 1575 by the end of 2013.

Happy Friday to all!