The Sky Has Fallen: Now What?
Superstrategist Ed Yardeni is quoted by James Pethokoukis in US News & World Report on what could go right in 2009: (1) Lower mortgage rates fuel a refinancing boom which lifts consumer spending. (2) Home sales increase and home prices stabilize. (3) Easier credit conditions increase auto sales. (4) The drop in fuel prices also boosts consumer spending; the unemployment rate peaks below 8%. (5) Massive spending on infrastructure by the US government offsets weakness in such spending by state and local governments. (6) The money supply grows rapidly. (7) Stimulative monetary and fiscal policies overseas revive global economic activity and US exports. (8) Depleted inventories and improving sales trigger a big jump in industrial production. (9) Credit quality spreads narrow significantly and rapidly as investors seek better returns than available in Treasury securities. (10) Stock prices rise 30%-40% in anticipation of better earnings during the second half of 2009 and in 2010. (11) Inflation remains subdued, and productivity pops.My approach is “might as well be optimistic.” For more reasons the economic news (including consumer spending) is not all bleak, see the current issue of Growth Strategies (ask me to send it by email), or see my soon-to-be-posted piece onwww.newgeography.com.
Filed Under Ask Dr. Roger