An Economic Playbook 2009

By Bill Glynn

Economy May be Bottoming but Main Street will Remain Under Water

Economists are being conservative in a quarter-by-quarter analysis of how and when the U.S. economy and housing market will recover. Based on manufacturing output, exports, and a host of variables, everyone is eyeing GDP growth - especially when compared to last year. I am of the opinion that a lemonade stand would look positive against the last year. Expect that U.S. "big business" will take some time to begin to revive itself - not the expected big bounce, but a slow, painful and gradual increase. The key will be you and me getting back to buying products, goods and services. It has always been the key. Without consumption, no economy can survive. Credit-addicted consumers will remain in rehab and locked out of the spending game for quite a while. The unemployed and under employed will be a huge factor in recovery given that they are hobbled and scared. Those consumers are likely to have curbed their spending or stopped all non-essential purchases already. These consumers will most likely be withdrawn from spending and focus on rebuilding their lives - that is if they can ever get a job or something comparable. Expect this to further impact domestic growth. The credit-addicted can't get more credit and the creditworthy aren't going to spend enough to make up for all that. It is the credit spending that artificially boosted the economy for so long. [more...]