Will the US Economy — and the Markets — Finally Roar Back?

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Washington and Europe: Fear Factors

That's what I said last year, and I'll repeat it this year. But this year, Washington could be an even bigger source of angst if politicians don't figure out how to compromise on all things related to the dreaded "fiscal cliff" and find agreement on taxes and spending. China, on the other hand, could be a positive if its economy gets back on track.

Half Full!

I have a t-shirt with that slogan on it because I am an optimist at heart. I want to see the economy not just get on its feet, but running in a more normal way. Many outcomes will be shaped by what happens in Washington this year, and the fate of the fragile, slow-growing economy is the big one. Right now, there are mixed messages into the year end. Improved housing is helping the consumer become more confident. There is certainly a humming under the surface that could signal something stronger ahead.

New Highs?

Stocks will rise and fall with every cliff hanger, but I'm betting we finally see a new high for the S&P 500 before the end of 2013. It could be a rough year for stocks, but I'm hoping the "cliff" is solved with a minimum of histrionics from politicians.

A Long Time at Zero

If the economy does kick into gear, the market will start telling the Fed to tighten up so we may see yields rising. But the Fedwill still have an easing program in place, and it won't let go of its zero rate policy in 2013.

Energy as an Engine

The U.S. has seen a stealth revival in energy output, both in oil and gas, and that will continue. The economic and political importance of this trend, in fact, will likely accelerate it.There will probably be multiple times in 2013 when the Mideast and Iran are seen as threats, pressuring global oil prices.

PREDICTIONS 2012: DOMM'S SCORECARD