The U.S. economy is expected to continue to grow in 2013, albeit at a slow-and-steady rate.
Chuck Simko, senior portfolio manager of MainStreet Advisors, spoke optimistically about the 2013 economy Tuesday morning at Seneca Regional Chamber of Commerce and Visitor Services' Economic Forecast Breakfast, which took place at Heidelberg University's Wickham Great Hall.
"We had plenty to worry about, but despite that, markets performed fairly well last year," Simko said.
PHOTO BY ZACH GASE
Chuck Simko of MainStreet Advisors said the economy is improving slowly Tuesday morning at the Seneca Regional Chamber of Commerce and Visitor Services’ Economic Forecast Breakfast at Heidelberg University.
He cited catalysts to last year's equity markets including tame inflation, housing market recovery, global monetary policy and reasonable equity valuations.
Simko said inflation is well under 2 percent, but also said inflation is the "biggest scare for us in 2013."
He said housing markets have "bottomed" and will continue to recover slowly.
"It'll be slow, but it will ultimately be a positive for the economy, in terms of creating new jobs once new construction starts to pick up," Simko said.
He also said that 30-year, fixed mortgage rates are at an all-time low, and home sales have been rising at a slow rate over the past few years.He said all this could be affected by inflation, which would increase interest and mortgage rates, and could "stifle" the housing market recovery.
"That big factor out there, that not a lot of people are paying attention to, is inflation," Simko said, "just because it can trickle through a lot of these, what you would have to call fragile recoveries, different sectors of the economy are going through right now."
Last December, he said was the lowest unemployment rate in five years. He said national unemployment, which is just less than 8 percent, is on a good path, but still is not going down fast enough.
Simko said the S&P 500 is at 1,500 for the third time in 13 years. He said he does not anticipate a sharp decline like the other two times the S&P 500 hit 1,500.
He said equity markets are more reasonable now than they have been in the past, and said the outlooks for 2013 are "generally positive."
One area that has not recovered is consumer confidence, Simko said. People are still spending, but are not feeling confident about it.
"Right now, fundamentally we don't see any signs of falling back into a recession, we just see really slow growth," he said.