Run!In November I posted a number of predictions for the 2009-2010 economy.  Having listened during the last couple of weeks to several economists present their views on 2009 and some thoughts about 2010, I thought I’d revisit the subject.

By and large I stand by the predictions offered in the earlier piece, but continue to be a bit more bearish; a few specifics:

  • Unemployment:  in November I suggested that unemployment will reach 7.7% in 2009; I now feel it will hit 8% this year
  • GDP: I earlier suggested that GDP growth would be -1% in ’09; my revised estimate puts it at -2% this year, rebounding somewhat in 2010 (~+1.5% growth)  Even Kiplinger, usually bullish, predicts GDP growth in 2009 to be at -1.8%
  • Housing Starts: In November I suggested that starts would bottom out in the “high 600K” range sometime in ’09; I now feel it will be closer to 550K on an annualized basis
  • Existing Home Sales: November:  5M; Now: 4.5M
  • Crude/Inflation/CPI: no change
  • NEW – the Stock Market: Hits bottom in Q3 of 2009

Edit: To this last point, MarketWatch happened to publish an article this morning on when the market will bottom out:  Searching for the Market Bottom.  The article includes a sidebar poll on when readers believe this will occur.  (as of 7:46AM Eastern time, 2/3/09, the 2nd half of the year held a slight lead.)

One of the economists I was lucky enough to listen to last week was Alan Beaulieu of the Institute for Trend Research.  I saw Alan speak at a symposium in August of 2006 and he was predicting a housing bubble burst and a significant recession to take place in 2007-2008; certainly his timing was a bit off, but the substance of his remarks was scarily on point.

As a result, I paid attention when he said last week that investment accounts, if left invested as they were prior to the recession, would take 10 years to reach their October 2007 levels!

Tomorrow I’ll offer a few suggestions for how to invest as the economy and market begin to recover.

Oh – and if all this seems too dire for you, check out this post from The Simple Dollar which offers a rosier picture of the future:  How I Look at Economic News – Beyond the Talking Heads

Edit: a friend sent me a link to this 2007 video in which Peter Schiff is nearly laughed off the air for suggesting that the housing bubble would burst:

Finally, the Legal department implores me to mention:  the views and predictions offered here are my own;  I am not an economist.  The opinions expressed here are offered for your entertainment  …and so on. [superemotions file=”icon_wink.gif” title=”Wink”]

Care to argue with my predictions Please comment!

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1 Comment on Fearless predictions for the 2009-2010 economy – updated

  1. Wow! These predictions are fearless. Out here in San Diego, unemployment is at 9.3%… and I expect it to get worse.


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