The New Year is right around the corner, and it's once again time for a treasure trove of financial geniuses to spew forth a copious amount of predictions about the coming year. You can't look anywhere without escaping prediction-palooza -- and I didn't say you'd escape it here, either!

Last year, I made two bold predictions: That large money center banks would be the best-performing sector of the market, and that large caps would outperform small caps during the course of the year. Unlike other financial pundits, my Foolish colleagues and I have no problem laying out our claims and noting our wins alongside our failures for the world to see -- that is the basis behind the Fool's disclosure policy and CAPScalls. If you said it, own up to it; plain and simple!

As for my selections last year, I'd say they performed admirably, but they didn't hit the bullseye. The Dow Jones U.S. Bank Index has risen 31% over the trailing-12-month period , led by a triple-digit gain in Bank of America (NYSE:BAC), and gains of 50% and 36%, respectively, for Citigroup (NYSE:C) and JPMorgan Chase (NYSE:JPM). Large banks, like Bank of America and Citigroup, have done a good job of divesting non-core assets to boost capital, but that was no match for the 80% jump from the Dow Jones U.S. Homebuilding Index in 2012.

As for my prediction that large caps would outperform small caps, that didn't fare as well. According to my predetermined benchmarks, small caps outdueled large caps by a dividend-adjusted sum of 16.9% to 15.6% -- although everyone who was long appears to be a winner!

Now, the time has come to once again crank out two bold predictions for 2013. Although these ideas may seem far-fetched, I think enough evidence exists that, while bold in nature, they appear quite achievable.

1. The United States will have at least one quarter of negative GDP growth
I waffled back and forth between the idea of whether or not the U.S. would dip into a recession in 2013 and decided that two consecutive quarters of negative GDP growth may not happen -- but I consider a contraction in GDP almost a certainty for either the first or second-quarter of 2013. The reasoning behind my thoughts really shouldn't surprise you, but some of the correlations might given that my Foolish colleague Morgan Housel recently brought your attention to multiple reasons listed by The Spectator in the U.K. why 2012 was the "greatest year ever."  

As you might expect, the combination of tax hikes and spending cuts, triggered by either a no-deal on the fiscal cliff, or a smaller fiscal cliff deal, will undoubtedly remove discretionary income from an economy that's dependent on consumer spending to drive 70% of GDP. Don't forget that a U.S. fiscal cliff debate is also right around the corner. Having been raised 78 times since 1960, the U.S. national debt is well over $16 trillion now and it seems unlikely to be raised with any significance unless further budgetary cuts are enacted.

Data received yesterday from the MasterCard Advisors Spending Pulse demonstrated that holiday retail sales rose just 0.7% compared to expectations for retail sales growth of 3% to 4%. This astronomical miss underscores just how uncertain individual and small business owners are about their tax situation in 2013, leading me to believe we could be headed to a consumer spending-led GDP dip sooner rather than later.

Another factor that can't be overlooked or discounted here is the effect that China's had in buoying the U.S. economy. In recent years, China has become paramount to the United States' success from both an importing and exporting perspective. China's inexpensive labor market has saved U.S. companies millions, and it's one reason medical device maker Boston Scientific (NYSE:BSX), beverage giant Coca-Cola (NYSE:KO), and consumer staples magnate Procter & Gamble (NYSE:PG) have chosen to make big investments abroad rather than domestically. It's also no coincidence that a slowdown in Chinese GDP growth often correlates to near-recessions, or actual recessions, within the U.S. since 1990.

Source:, China's GDP was only released annually prior to 1994.

As you can see from the chart above, the 7% GDP growth level for China acts as almost a fulcrum for the U.S. economy -- anything below that level often translates into a recession or extremely low growth period for the United States. You can make your case for which came first, the chicken or the egg, when it comes to who's leading who in the U.S. vs. China debate, but it appears clear to me that China's seven consecutive quarters of lower GDP growth since Q4 2010 portend a growing concern for the U.S. in 2013.

2. Italy will require financial assistance from the E.U.
Pretty much right on cue every spring, another European Union member stumbles over its own debt and goes begging and pleading to European regulators to lend it money and restructure its debt. This year looks like the year Italy will swallow its hubris and succumb to the need for an E.U. bailout.

I will admit that at the moment, things don't look nearly as dire as they did six months ago. In previous months, Italy has managed to push reforms through its Parliament that essentially amount to higher taxation of its citizens, and 10-year bond rates have fallen from nearly 7% to just 4.46% as of this writing. But that's all about to change.

Mario Monti, who was able to lead these marginal economic reforms, has agreed to step down early, and it appears that former Prime Minister Silvio Berlusconi, who has spoken out vehemently against these austerity measures, will run again for Prime Minister.

Another factor to consider here is that nothing is being done to reinvigorate the Italian economy or to reduce government expenditures. Higher taxes will simply burden citizens more, and they don't address Italy's budget deficit or lay down any concrete plans to incite growth. Furthermore, analysts at Citigroup are calling for Italy's GDP to contract by 1.4% in 2013 -- that after contracting for five consecutive quarters -- all while its debt to GDP ratio is expected to rise to 137% by 2014 !

As I noted just over a year ago when I proposed five figures that should have you concerned about Italy, both the country's unemployment level and inflation rate remain well above historic averages. Although inflation rates have tamed since last year, at 2.5% they're still markedly higher than the 2% average over the past 15 years. Unemployment has been an even greater burden, rising from under 9% to 11.1% in November -- it's highest level since 1999 .

These figures are simply not sustainable, and bond traders are going to sniff this out within the first few weeks or months of 2013. I'd personally be shocked if Italy's 10-year bonds don't hit 7% yet again in 2013 and trigger some sort of response from the E.U. or International Monetary Fund with regards to a bailout package.

Foolish roundup
There you have it folks, two bold predictions for 2013. As always I'll remain fully accountable for my prognostications when we review them in one year's time. If you'd like to offer your own bold predictions to The Motley Fool community, feel free to add them in the comments section below. 

Fool contributor Sean Williams owns shares of Bank of America, but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and MasterCard. Motley Fool newsletter services have recommended buying shares of Coca-Cola and Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.