No one expects a miracle cure for the economy just because the year has changed, but economists say any slight change can turn it for the better or for worse.
Zagros Madjd-Sadjadi, chairman of the Department of Economics and Finance at Winston-Salem State University, said one of the main issues that will determine an economic rebound or further demise is the Middle East.
“It’s looking like there may be some sort of controversy over (the Strait of Hormuz),” Madjd-Sadjadi said. “If we end up taking military action, it could really sink our economy.”
Also, Madjd-Sadjadi said the political climate could make or break the U.S. economy.
“They are playing a very dangerous game with the national economy,” Madjd-Sadjadi said. “But if they can agree on a deficit reduction plan, we may be able to rebound a little.”
Jeff Terrell, trust investment manager with High Point Bank, agreed that much of 2011’s subplot carries forward into 2012.
“We’ve turned the page on our calendars, but we are not yet close to turning the page on what is going on in Europe or the U.S.,” Terrell said. “Recent economic data continues to be challenging, but better than recent past. As many problems as we have here, Europe is making us look good by comparison. Any coordinated global policy action to strengthen the eurozone would be a catalyst toward capital market improvement, even if such action is a Band-Aid. Resolution in Europe will shift the bulls-eye back toward the U.S.”
Madjd-Sadjadi agrees that Europe can affect our economy here, but on a different scale.
“Issues in Europe are still there, but will have less importance in the short term,” Madjd-Sadjadi said. “Europe is important in the long term, whereas the Middle East is important in the near term.”
Madjd-Sadjadi said one thing that can help the economy is a change in the way the American public thinks.
“We have to realize that the government can’t do everything, and we shouldn’t expect them to,” Madjd-Sadjadi said. “We have to know how not to get into bad habits, or we will not get out of this economic malaise.”
jhowse@hpe.com | 888-3617
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