I've updated my economic forecast for 2010. Here's a chart showing quarterly growth rates:
Key features: consumer spending on durables dips this quarter (after cash-for-clunkers), then grows at a pace that mixes conservative attitudes with pent-up demand and limited credit availability. I spent more time this round modeling inventories. It's still a big wild card, that can swing quarterly numbers hugely. For instance, an optimistic--but not implausible--figure for the change in inventories this quarter adds another 1.5 percentage point to GDP growth.
This growth rate is well above productivity growth, so we'll make progress lowering the unemployment rate. Note huge, sudden progress, but gradual improvement.
I'm assuming that the Fed will slow it's stimulus, preventing an upside breakout. With this in place, the inflation rate should be tame.
This is strong enough growth that businesses should conduct a Recovery Readiness Audit, that surveys all issues tied to business expansion: sales, operations, finance. I can help your company with that; give me a call.
I think the worst has passed, the economy is going into what we call a U shape recovery. Dont you agree?
Posted by: The Don | November 14, 2009 at 05:46 PM
Have we ever had a stimulus this extensive and not had inflation at some point down the road ?
Posted by: Jim West | November 29, 2009 at 12:58 PM