Posted on 02/23/2008 10:24:35 AM PST by VegasCowboy
U.S. economic growth will slow to a crawl but avoid recession during the first half of this year while inflation will continue to rise, economists surveyed by the National Association for Business Economics said.
The association’s latest quarterly survey shows 55% of respondents expect the nation will avoid a recession. But they expect growth of the gross domestic product of just 0.4% at an annual rate in the first three months of 2008, followed by a 1% pace over the following three months.
Of the 45% who predicted the U.S. will enter a recession this year, most expect a “short and shallow” downturn. Only a few are projecting a “deep, protracted slide in economic activity.”
(Excerpt) Read more at blogs.wsj.com ...
Doomed? Hmmm. Maybe not.
Yep. Inflation will likely be an issue. Long-term rates are already ticking up. There’s a lot of people holding low-yielding, long-term treasurys that are going to be feeling the pinch here very soon.
That all right, the Democrats will just raise taxes and everything will be perfect. The golden one, Obama, has promised it. /s
Make the tax cuts permanent, and cut taxes further.
Their prediction of 2.5% inflation sounds pleasantly optimistic. I can only hope they are right, that the actual inflation rate of 4.1% for all of 2007 goes down to only 2.5% for all of 2008.
The high cost of oil, excluded from core inflation, has yet to really ripple through the economy from transportation to manufacturing. I guess they are saying despite massive appreciation in energy cost, we are going to see inflaction fall back well below 2007 levels. Umm... OK.
I sure hope so.
They are predicting moderate inflation of only 2.5%. That is their basis for avoiding a recession. They are predicting GDP growth of 2.9% - 2.5% inflation = 0.4% net GDP growth. If we see a repeat of 2007’s 4% inflation rate, then net GDP growth will be -1.1% or recession.
They are saying slow growth, moderate recession. I hope so. I’m skeptical however with the liquidity crisis still in full bloom, with the trends toward higher inflation we have seen in 2007, and with further losses from the subprime mess yet to be marked down.
.....Steve Forbes thinks that the doom and gloomers shouldn’t be listened to. He sees one quarter of bad news and then sees the economy coming back in the second quarter. A senior partner at Accel Venture Partners told me while we were waiting for a bus together that he’s watching the sales and other data from 250 startups reporting to Accel and he sees nothing but growth and is very optimistic. That optimism has been shared among the VC’s I’ve run into this week. Google execs are upbeat and are hiring and so are many other companies. Startups continue getting funded. Facebook’s executives tell me they are continuing to hire and expand at a rapid pace.
On the other hand, the subprime problems are very real. There are companies all across the board, however, that are still laying off workers-still struggling with the Telecom slow downs.
No. matter what we think about the mantra of Green collar workers touted by Mrs. Clinton, it is a new job market which will be worth watching, studying and investing in. Green does not have to be "New" Green company; but "Old" Big Oil already heavily investing in alternatives.
There are those who will wring their hands; but always Americans that will seize upon new opportunities to create the next Google-like experience. Just my opinion.
You can't always HOPE to ride one single wave, you'll have to stop and paddle to the next one, at some point.
I realize companies want to grow, expand, invest, sell and make money. My fear of a recession is based on the massive consumer debt built up over the years, and the fact that consumers can no longer extract barrels of money from the equity in their appreciating homes.
I hope the economy grows. But that requires that the tapped-out consumers continue to borrow and spend at historic rates. I am sure that is possible, but I am having great difficulty reconciling how it is possible.
It didn’t make sense to me that the “new economy” would support companies during the tech bubble that produced nothing and did nothing. The NASDAQ runup made no sense to me. Now, it doesn’t make sense to me that the consumer will continue uninterrupted now that the wealth-effect from housing appreciation has turned negative.
I am confused how consumers can find more debt to continue to shop till they drop, so predictions of growth don’t make sense to me. I’m sure I’m wrong, but I just can’t understand how the consumer can go deeper in debt that he currently is. I mean, there are frugal people who mostly buy what they need. These aren’t the people you need to stimulate the economy. You need the free spenders who party like no tomorrow, buy the latest gadgets, and spend constantly getting deeper and deeper in debt. I think those folks are going to hit a wall.
But like I said, I’m sure I’m wrong. I wasn’t wrong about the NASDAQ bubble or the housing bubble, but I’m sure I’m wrong this time and the tapped out consumers will find some new magic source of credit to continue spending like no tomorrow...
Please stop kidding around with that puss. It's the same puss we went through proving was worthless during the Carter maladministration. I know it's your opinion, but try thinking back to the "misery index" and how all the "wind farms" fell into ruin the minute oil prices fell back to reasonable and sustainable levels for YEARS!!!
I’d be curious to see a breakdown of economic activity in the US, including that derived from consumer credit, consumers’ incomes, exports, etc. While I wholeheartedly agree that there will be a potentially dramatic pullback in consumer credit, I wonder how much of that will be offset by higher incomes (incomes rose in 2007, and I assume it should at least grow modestly in 2008) and higher exports due to a weaker dollar. I googled for this info but couldn’t find anything that fit the bill.
Inflation isn't caused by high oil prices. But then you knew that.
and it'll all happen again......
I'm most amazed at the wishful thinking that goes on around energy.
China & India weren’t booming then. Don’t get me wrong, oil will probably drop—but to a still pricy $50-60/barrel instead of say $15 like it did less than a decade ago. Now, if all 3 countries go into recession (US, China, India), it may but I don’t think India will and China probably won’t although I don’t expect 10% gdp growth to continue.
If consumer debt was as massive as you suggest then household net worth wouldn't be setting a new record every quarter. Homeowner equity only accounts for around 20% of our net worth. We own a lot of assets other than our homes.
Good points and 50-60 may even be a low. However, once the cost of green truly hits home, the more realistic usage of nukes, coal and natural gas will be so attractive to a strapped populace that the Gore push will be swept aside. (I think)
I hope you are right. Not using coal, nuclear and our own oil supply is a suicidal national policy (which is probably just what most of the environmentalists want).
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