Tim, I agree, it is really a question of consumer confidence, A simple rapid fire tax cut that will distribute the yearly projected cut of $160 Billion in the form of $1000 to each tax payer as a direct tax credit (reenacted each year and adjusted, hopefully only up, according to most recent surplus projections) would do wonder to increase consumer confidence and reliquify the consumer. Changing the rates, IMHO, will not have the same psychological impact, nor, IMHO, will it trickle as much to become consumer buying power. Early last year, when every one was talking about the surplus, I warned that historically, surpluses, particularly if they exceed 1% to 2% of GDP are sure to bring on a recession, if consumer confidence does not change, this present inventory adjustment will rapidly turn into a recession. That is one reason that my turnips are not willing, yet, to deliver a more detailed scenario post the late April/early May peak they expect. They are already starting to see problems coming in after the 4th of July (a local bottom around July 28 to August 4th, will need to refine), but that depends a lot on the tax cut, consumer confidence and whether AG cuts .5% or .25% (I prefer the latter, if he goes another .5% he looses the ability to keep the bias positive later on and shorten the recovery).
Zeev
Zeev |
