Robert W. Baird & Co.’s annual Economic and Stock Market Outlook report indicates business spending growth is likely to slow this year as a result of uncertainty, while the labor market and wages will continue to languish.
The report, produced by Bruce Bittles, Baird’s chief investment strategist, and William Delwiche, a Baird investment strategist, calls on the government to make decisive policies to provide certainty in the economy and the markets.
Higher taxes and less government spending are likely in 2013, making it difficult to achieve real economic growth.
The regulatory environment will be less favorable, household income will remain largely the same and policies are likely to continue creating uncertainty.
However, the housing market is improving, the trade balance is becoming more favorable and worker productivity remains high.
Meanwhile, the U.S. and European policy uncertainty and low market demand will continue to have a negative global impact.
Investors can expect long-term interest rates to stay down for the time being. At the start of the year, broad market strength and wary investors could put stocks slightly higher, but they could consolidate 2012’s gains. There are likely to be lower-risk entry points in the latter part of the year.
The report also disagrees with current monetary policy being implemented by the Federal Reserve in an effort to counterbalance stalled fiscal policy progress.
In 2013, the economy is likely to slog along at 1.5 to 2 percent growth, similar to the slow growth in 2012, according to the report.