This would be the year when the global economy finally regained its vigor. At least thats what many had hoped.
It didnt happen.
The three largest economies the United States, China and Japan struggled again in 2012. The 17 countries that use the euro endured a third painful year in their financial crisis and slid into recession. Emerging economies slowed.
President Barack Obama defied predictions by sailing to re-election. And his landmark health-care plan surprisingly survived Supreme Court review. Obamas re-election triggered a faceoff with Republicans over averting the fiscal cliff the drastic spending cuts and tax increases that were set to kick in with the start of the new year Tuesday.
The tech world dueled over smartphones and tablets and saw Facebooks IPO sour as fast as it had sizzled. The housing market inched toward recovery. And Americans suffered both a catastrophic drought and a catastrophic superstorm.
Least surprisingly, perhaps, another gallery of rogues brought investigative scrutiny to Wall Street.
The achingly slow global economic recovery was chosen as the top business story of the year by business editors at The Associated Press. The U.S. presidential election came in second, followed by the Supreme Courts upholding Obamas health-care plan.
1. Global economic malaise
Worldwide growth was slack again in 2012. The global economy grew just 3.3 percent, down from 3.8 percent in 2011 and 5.1 percent in 2010, the International Monetary Fund estimates. The U.S. economy, the worlds largest, failed to gain traction. Five years after a recession seized the economy and more than three years after it ended, growth in the United States was only about 2 percent. Unemployment remained a high 7.7 percent.
Europe fared worse. Its financial crisis did stabilize, thanks in part to the European Central Banks plan to buy government bonds to help countries manage their debts. But the euro alliance sank into recession. Europeans, in turn, held back China, the worlds No. 2 economy, by cutting back on Chinese goods. Chinas economy grew at a 7.4 percent annual rate in the July-September quarter. Though a scorching pace for developed countries, that marked a 3½-year low for China. And at years end, Japans economy, the worlds third-largest, was shrinking.
2. Obamas re-election
Obama vaulted to a re-election victory over Mitt Romney, who had staked his bid on the weakest U.S. economic rebound since the Great Depression and had pledged to slash taxes. Unemployment under Obama topped 8 percent for 43 consecutive months.
Yet he won despite the highest unemployment rate of any president seeking re-election since World War II. Voters assigned him higher marks on the economy as the year progressed, perhaps encouraged by job gains. As the fiscal cliff neared, Obama fought to raise taxes on the wealthiest Americans. He also demanded aid for the long-term unemployed and money for roads, bridges and other infrastructure. Economists raised hopes that if the fiscal cliff was averted, the gloom would lift in Obamas second term.
3. Obamacare upheld
The Supreme Court caught many by surprise when it backed Obama administrations health-care reform in a 5-4 vote. The law requires Americans to buy insurance or pay a tax, while subsidizing the needy. Hospitals and health insurers likely will benefit from 30 million new customers. Medical device makers, though, will face a new sales tax. And some small businesses say the law will discourage hiring because it requires companies to provide health care once they employ more than 50 people.
4. The fiscal cliff
A dreaded package of tax increases and deep spending cuts to domestic and defense programs loomed over the economy in the years final months. Negotiators struggled to forge a budget deal to avert those measures. If they failed, the tax increases and spending cuts would kick in Jan. 1. That threat was intended to be so chilling that it would force Congress and the White House to take the painful budgetary steps needed to avoid it. Economists warned that if the fiscal-cliff measures remained in place for much of 2013, they would cause a recession.
5. Facebooks IPO
Years of anticipation led to Facebooks initial public offering of stock the hottest Internet IPO since Googles in 2004. Many of the billion or so users of the worlds largest online social network craved a chance to buy in early. On the eve of its first trading day, Facebooks market value was $104 billion more than Amazon.coms or McDonalds at the time. Yet the IPO bombed. Its debut was marred by technical glitches with the Nasdaq exchange, allegations that a revenue gap wasnt publicly disclosed and complaints that the IPO had been priced too high. Traders lost confidence fast. Within three months, Facebooks stock had shed more than half its IPO value.
6. Housing recovery
After a six-year slump that sent more than 4 million homes into foreclosure and shrank home prices about one-third nationwide, the U.S. housing market began to recover in mid-year. Modest job gains and record-low mortgage rates fueled demand. And the supply of available homes sank. By June, prices began rising. And builders broke ground on the most homes in four years. Housing boosted economic growth this year for the first time since 2005.
7. Big Oils return
Domestic crude oil production achieved its biggest one-year gain since 1951, driven by output in North Dakota and Texas. The United States is on pace to pass Saudi Arabia as the worlds top oil producer within two years. Credit goes to drilling improvements, like those that have fed a boom in domestic natural-gas production horizontal drilling combined with hydraulic fracturing, or fracking. The new production helped cut natural-gas prices to their lowest levels in more than a decade. Higher oil production helped reduce oil imports to 1992 levels and hand record profits to U.S. refiners. Gasoline prices declined in the last three months of the year. But for all of 2012, the average gallon was a record $3.63.
8. Banks behaving badly
It was a banner year for bank drama. JPMorgan Chase lost $6 billion in a complex series of trades. And one of its bankers in London grew famous for big bets and became known as the London whale. Morgan Stanley was accused of botching Facebooks IPO. An ex-banker trashed Goldman Sachs for putting profits ahead of customers and for mocking clients as muppets. Barclays and UBS were fined for their roles in manipulating a key global interest rate. And HSBC agreed to pay $1.9 billion to settle charges that it enabled money laundering by Mexican drug traffickers.
9. Mother Nature
There wasnt enough rain in much of the nation. Then, suddenly there was much too much. The nation suffered its worst drought since the 1950s, covering 80 percent of U.S. farmland. Grain and food prices soared. Then a storm so destructive it was dubbed a superstorm walloped the Northeast. Sandy blasted coastal New Jersey and New York and put 8.5 million customers in 21 states in the dark. Sandy likely will be the second-costliest U.S. storm ever after Hurricane Katrina.
10. Mobile-gadget wars
Competition in mobile technology intensified. Apple maintained its worldwide dominance. But the use of Googles Android software on competing smartphones and tablets spread faster than Apples market share. Forty-four percent of U.S. adults own smartphones, up from about 35 percent a year ago. Tablet ownership doubled in 2012. Taking on Apples iPad, Microsoft unleashed its Surface tablet and began selling Windows 8, a tablet-friendly operating system. Amazon and Barnes & Noble rushed out high-definition-screen tablets. Each priced its premium model less than the entry-level iPad. Apple struck back with the iPad Mini. Struggling to compete, once-formidable Nokia and BlackBerry-maker Research In Motion floundered.