Opinion: A Hesitant Look at an Uncertain 2013

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By Bob Costello

Chief Economist

American Trucking Associations

This Opinion piece appears in the Jan. 14 print edition of Transport Topics. Click here to subscribe today.

As we close the book on 2012, I think most economists and trucking executives would agree that while growth is preferable to the alternative, the relatively anemic growth we saw last year is certainly nothing to get excited about.

And, unfortunately, in looking ahead to 2013, I have to say that if you didn’t like how the economy performed in 2012, then you’re not likely to feel good about this year, as it will be the same or worse by most measures.

There are a number of culprits conspiring to keep the brakes on what certainly feels like an economy on the verge of robust growth. Increases in taxes; reductions in spending by businesses, consumers and governments; reduced manufacturing output; and a lack of confidence that lawmakers in Washington can solve the nation’s most pressing issues are all holding the economy back from the growth we are all hoping for.

One economic certainty for 2013 is that your taxes are going up. Despite the 11th- (or 12th- or 13th-) hour deal to avert the “fiscal cliff” that is being hailed as keeping rates lower for the vast majority of taxpayers, most Americans will see their taxes rise as the payroll tax holiday expires. This 2% increase in taxes will be compounded for those with higher incomes, as they will see their normal income tax rates go up.

Higher-income taxpayers also will see further increases in the payroll tax and taxes on investment income in order to finance the reforms of the Affordable Care Act, or Obamacare.

Increases in taxes will reduce the amount of money consumers have to spend, at a time when households already were dialing back their consumption. In 2012, consumer spending on goods rose 4.3%, or about half as much as it rose in 2011. Those tax hikes, coupled with slow growth in employment and wages, will keep a lid on consumer spending this year — I’m expecting only a 2.1% rise in spending on goods.

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