GOLDMAN: The Economic Crisis Ends In 2013

GOLDMAN: The Economic Crisis Ends In 2013

Goldman's Jan Hatzius is out with an excellent note that essentially calls for the economic crisis to end in 2013.

The title of the note is The US Economy in 2013-2016: Moving Over the Hump, and the gist is that 2013 will be the last year of sub-trend growth.

Following 2013, the US will see growth above 3%, which is not amazing, but far better than what we've seen since the economy began recovering in 2009.

What's important to understand is that this isn't just based on some vague optimism or a foggy notion of "getting through a current rough patch," but rather a financial balances model that has put Hatzius at the forefront of Wall Street economists in understanding this economic period.

The essence of the model is essentially this chart, which recognizes that private sector surpluses (rising corporate and household savings) is the mirror image of public sector deficits.

financial balances
Goldman Sachs
The notion that private and public sector deficits offset each other is critical for understanding what we've seen in this downturn, though the framework is still not part of the common parlance. Richard Koo has been writing about this forever. In the academic world, University of Chicago professor Amir Sufi has written a lot about private sector balance sheets, and how they've made this crisis unique.