2009 Economic Forecasts...what will happen, when?

Now is the time to look into your crystal balls and document what you think will happen to the economy this year and when. When will the stock market start to recover? Will it recover? Will the economic stimulus packages be effective? If so when?

 

Log in or Sign up to hide all adverts.

A recession is ONLY a reaction to the real problem...which is the artificial expansion.

Just as withdrawal symptoms are only a reaction to the real problem...the euphoria of the drug high.

Obama will continue talking cold turkey...sacrifice, responsibility, saving our pennies, rolling up our sleeves...on the one hand.

And on the other he will try to restart the expansion of easy credit...redistributing the wealth...with force if necessary.

Change...you better believe in.

 

Log in or Sign up to hide all adverts.

Depends upon many factors as to what the future holds this year. There may need to be another 500 to 1 trillion dollars injected into the economy if it doesn't get moving by the third quarter or even before. If prices climb and interest doesn't fall low enough for people to borrow , then more problems will lie ahead.

 

Log in or Sign up to hide all adverts.

OK, I know nothing about economics. I'm guessing 2009 will bring worldwide depression. What happens then is anyone's guess.

 

Well I am thinking that Obama will prove himself a competent leader and restore some sense of confidence in the office of the presidency within the next three months. I expect to see mixed 4th quarter results...with mostly bad news. I expect Q1 of 2009 to be somewhat better than Q4 2008 because of the stimulus and new leadership in Washinton, but still bad.

Seeing that the Q1 2009 results are improving slightly, I expect to see the stock market rally around March 30 - April 15. Given the depressed prices, I expect to see the stock move steadily upward for the balance of the year. I expect to see Q2 results flat with modest improvements in Q3 2009. I expect Q4 to be a good one for stocks as there should be significant improvement in earnings as the stimulus moves the economy.

Areas of concern, Obama moves cash around (like Bush) instead of spending money and moving the demand curve. If this happens there will be a mild improvement, but it will not be sustained and 2010 will not be good. I think Obama may initally screw this up, but will recover.

I think in about a month, once Obama's stimulus plan becomes clear, select banks may be a good investment.

 

The rest of the world, especially China, will realize investing in dollars is no better than buying a drunk a drink and expecting them to pay you back after you've been buying them drinks for half a century. When that happens the US won't be able to borrow and will have to print money from nothing, more than it already does. When that happens the dollar falls precipitously and the Amero or maybe even the Euro takes over for the dollar.

During such times it is possible wars or terrorist attacks happen to distract people from the look of the currency in their pocketbooks.

Fuel/food shortages are also possible. Not sure how this would be pulled off, but food prices went up, fuel went down, and food is still up.

Obama will make his bolder moves as its early enough in his 1st term it will be easier for them to be ameleorated if they turn out to be unpopular later. Look for a reason for and then a push for the draft to return under the guise of Obama's mandatory national service programs. I am actually in favor of the draft but I think many of Obama's supporters won't be happy about it.

Civil unrest and homelessness will continue to rise as more lose homes and jobs. Local and national news run by conglomerates will downplay this or even outright lie about it.

Ammunition and its components will be placed under greater regulation to make it harder for regular citizens to get it. Eventually making guns useless paperweights for most gun owners.

Political correctness will continue to push its way forward through the workplace.

There are many tentacles from the same octopus winding their way throughout the country and world. The coordination of them at times seems implausible while at others it is all too obvious. The trends are toward a poorer and older population among the masses and a greater percentage from third world nations. Is the octopus racist?

 

My predictions for one year from now:

Dow is bouncing back and forth around the 10,000 barrier.
Housing is forecast to begin its recovery in the spring/summer of '10.
The last three months have seen employment gains, signaling the end of the recession.
Oil is trading at $100 a barrel.
Gold is taking a major hit.
The US Congress has repealed the 22nd amendment.

 

Kinda of down are you desi?

First, China is very dollar dependent. If the screw up the dollar they loose. What will they do with all those dollars if they do not return them to the United States? Will they stick them in a giant matress earning no interest and loosing value each year due to modest inflation? The answer is they have no other choice but invest in US assets with their dollars. Now if they stop trading with The United States they blow away 70 percent of their economy, that certianly is a wise move on their part. The Chinese are pretty smart and not self destructive. They will continue to invest in The United States, they really don't have much choice.

 

KMguru you are right. Ultimately dollars can only be invested in dollar denominated assets. At the present, oil contracts are based in dollars. So China could buy a lot of oil. But no matter what, who ever holds dollars must use those dollars somewhere.

This is another point that is lost on most Republicans, the number of dollars in circulation is controlled by the Federal Reserve Bank. The American Dollars, is in fact a Federal Reserve Note. The Federal Reserve can expand or shrink the money supply at will. That is one of their main functions.

So when money starts moving again and if the Fed expands money supply to deal with the current crisis, they will need to contract the money supply to prevent or mitigate inflation.

 

Exactly. Which makes those of us with large savings accounts look like idiots.

The policy of keeping the foot to the pedal is one that does not promote saving, which is why only fools like myself act responsibly.

 

Savings are important as it provides the basis for banking. Savings is an economic term for putting money in bank accounts. Bank accounts are critical for a properly functioning economy. If you invest money in the stock market, that is not savings...that is investment.

Banks in turn use your savings to lend to enterprises and individuals...creating jobs and production of goods and services. It is an efficient use of capital.

 

Derivatives are are problem as you point out and probaby need regulation. However, the big problem was the repeal of Glass-Stegal which prevented banks from involvement in this kind of risk taking.

 

How do you think the FED &/or Treasury can do this?

Without converting the recession into depression via double digit interest rates on even short term Treasury bills (or the IRS collecting higher taxes to remove circulating money, which would do so even quicker.)

As I see it, the government has fired ( and will fire more) multi-trillion dollar bullets at the specter of the recession collapsing into depression and continue to miss, but make the depression* have the companion of run-a-way inflation. (Misery loves company)
------------
* "Depression" defined as 10% or more annual decline in GDP and "Run-a-way inflation" defined as dollar losing purchasing power (against a basket of commodities, including gold and oil) significantly greater than 10% per year. I do not know the name of this beast: "Inflating depression" perhaps?

 

Has the Federal Reserve released the true value of its assets yet?

 

I don't know BillyT, I have my doubts.