2012 was supposed to be the recovery year. It wasn’t. The three major economies of the world – the U.S., China and Japan – continued to struggle. The EU faced a new financial crisis and slid back into recession. Social unrest in the Euro zone grew. Even the emerging economies slowed as political insecurity took hold throughout South and Central America.
President Obama became the first post war president re-elected with unemployment hovering around 8%. There was no time to celebrate as the U.S. went into the holiday season gridlocked over the impending “fiscal cliff” – the draconian spending cuts and tax increases scheduled to take hold on January 1st.
The promise of Facebook’s IPO quickly fizzled and Wall Street was again under investigation. America faced both drought and Superstorm Sandy even as the housing market showed signs of recovery.
Minnesota School of Business students seeking a degree in business administration will study 2012 as a year of contrasts. The AP chose the slow economic recovery as the top business story of 2012, followed closely by the presidential election and the Supreme Court’s upholding of Obamacare. Here are some of the other the top stories of 2012, a year of contrasts.
• U.S. Oil is back as domestic oil saw the biggest one-year production gain since 1951. Driven by new finds in Texas and North Dakota, the U.S. is set to pass Saudi Arabia as the world’s top producer in the next two years. Technological advancements in drilling, such as horizontal drilling and fracking helped cut natural gas prices to the lowest level in more than a decade and gasoline prices fell in the last three months of 2012. Even so, gasoline averaged a record $3.63 per gallon in 2012.
• The Housing Market showed signs of recovery after a six-year slide that saw average prices drop 30%. Foreclosures fell and prices began to rise slightly. Record low mortgage rates fueled demand as the job market slowly improved. Supply got tighter as builders broke ground on new homes at the fastest rate in almost four years.
• Facebook’s IPO was the most anticipated tech offering since Google’s in 2004. The day before the offering, Facebook was valued at $104 billion. The IPO bombed as NASDAQ was roiled by technical glitches, allegations of revenue problems and complaints that this offering price was too high caused traders to quickly lose confidence. Within three months, Facebook stock lost over 50% of its IPO value
• The Fiscal Cliff loomed large as Congressional negotiators struggled to forge a budget compromise to prevent looming tax increases and huge spending cuts from taking place on January 1st. The economy came to a standstill as business owners wondered how “going over the cliff” would impact their bottom line. Economists raised an alarm of a new recession in 2013 if a deal was not reached.
• Obamacare survived a 5-4 Supreme Court ruling to become the law of the land. The new law requires all Americans to buy insurance or face paying a tax, while subsidizing the uninsured.
As 2013 begins we’ve narrowly averted the fiscal cliff as Congress chose to kick the can down the road. The next big battle looming that will affect business is the debt ceiling negotiations scheduled to take place in the coming months. As the economy starts to show signs of life, maybe 2013 will be the year of recovery that we’ve all been waiting for. Minnesota School of Business is preparing business students for the future. Learn more at http://www.msbcollege.edu/.