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Strategies & Market Trends : Classic TA Workplace
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To: Shack who started this subject6/1/2002 9:16:23 PM
From: John Madarasz  Read Replies (1) of 209892
 
How 9-11 Helped End the Recession
May 14, 2002
Christopher Thornberg
UCLA Anderson Forecast

Does this mean that we at the Anderson Forecast are now bullish on the economy?

Unfortunately not.

While the short-run spike in final demand is a good way to break the vicious cycle of recessions, it was at best a one quarter event. And at the same time it has pushed US national savings rates, already dangerously low, even farther into the red.

With a growing current account deficit and a threatened federal government deficit for the coming year, consumers are eventually going to have to slow down their profligate ways in order to balance the national books. This
implies weak personal consumption growth in the future, along with a weak US dollar to rebalance the external accounts.

Fixed investment—another important drive of long-run growth—remains flat, and it seems highly unlikely that we will see another surge like we saw in the late 90s between the continued abysmal corporate profits and the lack of any new general technologies in the pipeline.

And finally, the overall shallowness of the recession and the lack of a substantial employment have the perverse effect of limiting the strength of the rebound as well. Economies often receive a surge after downturns as the idled resources of production get back to work. With so few idled resources, the economy will not have this ricochet effect to pad this year’s numbers.

uclaforecast.com
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