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Boston Capital

Economy poised to grow, if the politics abate

You hear two things on New Year’s Day: resolutions and predictions. I’ll leave the resolutions up to you. I don’t put a lot of faith in New Year’s predictions, but there are a number of potential 2013 developments I’m watching. Here are a few:

Economy: The US economy is poised to do better than most people expect this year, as long as Washington can stay out of the way (see below). But economic improvement won’t translate to job growth on a similar pace. The divergence between moderate economic recovery and slower employment gains — on display in 2012 — may actually become more pronounced this year. The housing market will continue to be the strongest part of the US economic recovery through the first half of this year.

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Government (Part 1): The fiscal cliff drama that ended 2012 should have told you everything you need to know about Washington’s likely impact on this year’s economy. An opportunity to start over became another partisan game of chicken. The New Year's Eve compromise negotiations focused on a very narrow solution to the fiscal cliff Washington invented, not anything like the real federal budget problems we face. Political intransigence will make government the single biggest threat to America’s recovery again in 2013. The election did little — perhaps nothing — to alter that grim fact.

Government (Part 2): Closer to home, Governor Deval Patrick could accomplish something important by championing a real solution to nonstop financial crisis at the Massachusetts Bay Transportation Authority. Managers in charge of the transit system are already warning of another possible round of fare hikes and service cuts this year. Politicians keep looking for short-term solutions to the MBTA’s money problems. A real answer requires the state to assume some of the debt that is crushing the T’s operating budgets. Call that a long shot.

Health care: One of the state’s biggest financial­ engines went through a tumultuous 2012, and more of the same surely lies ahead. Health care in Massachusetts is quickly morphing into a relatively small number of giant organizations — merged or allied hospitals working with groups of doctors — that will dominate the state. That means more mergers and deals struck this year. Ultimately, these deals are supposed to deal with the long-term rise in health care costs. An ironic twist: Look for those costs to start rising faster again this year.

Biotech: Every industry comes out with new products every year, but I’m always interested in new treatments developed by local biotechnology companies. The 2013 crop includes AVEO Pharmaceuticals Inc., of Cambridge, and its new kidney cancer treatment. Regulators are expected to pass judgment on the drug this summer. Meanwhile, I’m waiting to see what happens this year to multiple sclerosis treatments under development at Genzyme Corp. in Cambridge.

Online commerce: There is a real chance this year for action that would require all online retailers to charge state sales taxes on applicable transactions. That means Massachusetts sales tax for Internet sales to state residents. Online retailing giant Amazon.com Inc. is cutting deals with states left and right — including­ Massachusetts — and giving up its opposition to tax collection. The days of tax-free Internet sales are numbered. But a change would require action in Washington, a city with an infinite capacity to do nothing.

Final stock tally for 2012

OK, I have one last look back after all.

The best-performing Massachusetts stock of 2012 was Infinity Pharmaceuticals Inc., which soared 296 percent last year. (My count eliminates very small stocks prone to wild fluctuations.) Shares of the Cambridge company developing cancer treatments started last year below $9 and finished at $35.

Among other big local winners with stock market values of at least $500 million: Smith & Wesson Holding Corp., of Springfield, up 94 percent; Ariad Pharmaceuticals Inc., of Cambridge, up 57 percent, and athenahealth Inc., of Watertown, up 49 percent.

The list of the biggest local stock market losers of the year, excluding companies that filed for bankruptcy protection in 2012, includes Zipcar Inc. in Cambridge, down 39 percent; iRobot Corp., of Bedford, down 37 percent, and Idenix Pharmaceuticals Inc., of Cambridge, down 35 percent.

The Red Herring

Boston Capital is going on hiatus, its first break in more than 17 years. I’ll be back in May. Happy New Year.

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.
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