‘Every rose has its thorn’, is a cliché characterizing the pain and suffering which accompanies the wonderful things. This inevitable aspect of life has in one way or the other changed one’s outlook towards the ensuing life. Look at the brighter side of life inspite of all the negativity-was one of the themes that we learnt in our early grooming days. But when the downfall is enveloped with dark clouds, it is hard to believe that the brighter side of life is just around the corner. No, I am not relating to you an abstract of a literary masterpiece, but I am relating to you the plight of investors who have certainly had a horror year in the financial arena. Will 2012 prove to be a turnaround or will the investors follow a similar fate vis-à-vis 2011?

Investors are having a hard time believing that the bumpy economic recovery is gaining momentum with the passage and is very likely to deliver a positive surprise in 2012. Economists, who are very much divided on this point, are starting to profess optimism, abandoning the reflexive pessimism of recent years, when the economy more often than not disappointed. But the other school of thought exclaims that the outlook is unrealistic. For one, recoveries from financial crisis are often long and difficult. Secondly, some of the growth of previous two decades was driven by excessive leverage and speculation.

Economists have forecasted a GDP growth of at least 3% in 2012, well above the 2.0-2.5% forecasts of the Federal Reserve and Wall Street consensus of 2%. Such optimism may seem somewhat fanciful given the current global environment. On the international front, there is trouble in the wake of the Europe’s sovereign debt crisis and economic slowdown in China. Meanwhile, the US faces its own potential debt explosion, and a host of lingering question marks from jobs to housing amongst others. However, following are the list of positives from the US:

• Household debt services payments as a percentage of disposable personal income hit a new 27-year low in the third quarter;
• Mortgage debt and consumer credit also continue to decrease from 2007 highs;
• Consumer spending is showing new lease of life;
• Retail Sales in November were 6.7% higher than a year ago;
• Personal Consumption Expenditure is up for the second year in a row;
• Exports in 2011 will almost certainly break the 2008 high of $1.842 trillion; and
• The critical job markets are on an optimistic wavelength as the Weekly jobless claims recently fell to a 3.5 year low.

The US economy has certainly come a long way since the days of 2008-09. The investors will be hoping for a brighter economy which will ultimately affect the world economy on the whole. They will be hoping for the dawn to arrive soon after a dark and cloudy 2011.