Bill McBride writes,

the 780 thousand housing starts in 2012 were the fourth lowest on an annual basis since the Census Bureau started tracking starts in 1959. Starts averaged 1.5 million per year from 1959 through 2000. Demographics and household formation suggests starts will return to close to that level over the next few years. That means starts will come close to doubling from the 2012 level.

Residential investment and housing starts are usually the best leading indicator for economy, so this suggests the economy will continue to grow over the next couple of years.

Another area of pent-up demand is the auto sector. How many cars would have to be sold over the next two years to reduce the average age of the U.S. auto stock from 11 years to 7 years? Is 7 years even too old?

The “oil tax” is going down. Even if the price of oil does not decline, the U.S. is becoming more of a producer and less of a net consumer.

If you think that the depressed economy was caused by weak private-sector balance sheets and de-leveraging, then, as McBride points out, our troubles are over. Also, the stock market has trended up since 2008.

It seems to me that more macroeconomists should share McBride’s bullishness. If you think that the economic activity consists of spending, then all signs point to a surge in spending over the next two years.

At a place like the Fed or CBO, I can imagine that few people want to forecast an economic surge. Calling a turning point in the economy is hard. It is much safer to project a continuation along recent trends, and then to revise your forecast when it becomes clear that the trend has changed. Also, the bulls of 2009 and 2010 must be feeling sheepish today, leaving the bears with more clout in the room.

I do not believe in the “economic activity = spending” mainstream view. The PSST model does not make me either bullish or bearish at this point. I would forecast something like normal growth in real output, say 3 percent, over the next two years. That should make me a pessimistic outlier, because the mainstream economists should be forecasting at least 5 percent real economic growth over the same period. But apparently not:

In a survey of economists the Federal Reserve Bank of Philadelphia conducted in the fourth quarter, individual forecasts for the change in gross domestic product from the end of 2012 to the end of 2013 were unusually clumped around the average forecast of a 2.3% gain. The forecast at the top of the 25th percentile—that is, a pessimistic outlook in which three-quarters of forecasts were higher—was for a 2.1% increase in GDP. The forecast at the 75th percentile, or the optimistic camp in which just a quarter of forecasts were higher, called for a 2.5% gain.