Ezra Klein: “How the economy could come back in 2012”

This is the 2nd of an indeterminate number of posts with other analysts’ and columnists’ economic predictions for 2012. I posted David Wessel’s from the WSJ here (it’s referenced in this post).

If you’re interested in sober, thoughtful, and comprehensible economic analysis, you should be reading the Washington Post’s Wonkbook piloted by Ezra Klein.

Take a look at Klein’s How the economy could come back in 2012. Klein is certainly more a realist than an optimist, but today’s short piece focuses on the potential upside to housing after a rather disappointing 2011:

But 2012 is a new year. And, as [Wessel in the WSJ] notes, the early data is encouraging. Unemployment claims are down to their lowest level in more than three years. Housing starts are up. The stock market is bouncing back. Europe’s latest round of bond sales wasn’t a complete disaster.

As Klein notes, some hedge funds are now betting on a pickup in housing. That pickup is likely to be disappointing to those placing bets on it, but it almost certainly will improve. And that’s just one reason for Klein’s cautious optimism (though he doesn’t say much about other reasons):

But just as 2010 and 2011 were worse than forecasters expected, there are plausible scenarios in which 2012 is better than forecasters now expect. Let’s hope.