Economy Poised for Surge as Most Accurate Economist Sees U.S. (Krugman disagrees)

[ProSense]

Economy Poised for Surge as Most Accurate Economist Sees U.S.

By Timothy R. Homan and Bob Willis

Dec. 28 (Bloomberg) -- The U.S. economy next year will turn in its best performance since 2004 as spending perks up and companies increase investment and hiring, says Dean Maki, the most-accurate forecaster in a Bloomberg News survey.

The world’s largest economy will expand 3.5 percent in 2010, according to Maki, the chief U.S. economist at Barclays Capital Inc. in New York. The rebound in stocks and rising incomes will prompt Americans to do what they do best --consume, said Maki, a former economist at the Federal Reserve. Faced with dwindling inventories and growing demand, companies will soon become confident the expansion will be sustained, he said.

Household spending “will pick up steam as we move into the second half of 2010,” said Maki, 44, who topped all 60 forecasters in the Bloomberg News ranking of gross domestic product projections for the first three quarters of 2009. “The overall picture for 2010 will be an economy growing rapidly enough to bring down the unemployment rate” to an average of 9.6 percent.

Maki, who specialized in researching household finances at the Fed from 1995 to 2000, said the economic recovery this time will be similar to past rebounds. Consumer purchases improved after last year’s 61 percent plunge in gasoline prices and will keep growing in 2010, reflecting the surge in stocks. Faster growth will push Treasury yields higher and help the dollar strengthen as the Fed raises interest rates, he predicts.

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Krugman:

December 28, 2009

Age of diminished expectations

“Economy poised for surge as most accurate economist see U.S.” reads the Bloomberg headline. So it’s a major disappointment to read what Bloomberg considers a “surge”: 3.5 percent growth in 2010.

Um, that’s really subpar for recoveries, let alone recoveries from deep slumps:



Or put it this way: during the Clinton years — a 8-year stretch — the average rate of growth was 3.7 percent. Growth at the pace Dean Maki predicts should be enough to bring unemployment down — but not by much. And his prediction is “among the highest” among 58 economists.

I hope he’s right, although my money is still on the more downbeat views of the Goldman guys. Still, it’s amazing how we’ve defined economic success down.

Interesting.

[n2doc]

1. W/O jobs I still don't see where the increased spending is going to come from

Perhaps the Bonus Bankers buying new 4th and 5th houses and hiring housekeepers and landscape people?

[ProSense]

3. Things are getting better, albeit slowly. n/t

[Lydia Leftcoast]

7. For whom?

Definitely for the investor class, who are evidently the only ones who count for the Republicans and their fellow travelers in the DLC.

[ProSense]

9. For a lot of people who kept and got jobs this year.

They exist, you know.

[Lydia Leftcoast]

13. Yes, I do know people who found jobs recently, but

I know just as many who lost them during the same time period, and I know even more, especially those over 50, who have been unemployed for what seems like forever and still have no prospects.

[brentspeak]

16. You didn't answer the question

Here's another one, though: There are entire states that are becoming ghost-regions: Michigan, Ohio, Indiana. How are things picking up for them?

[Phx_Dem]

10. For retailers, other businesses and regular people who have

a 401(k), things are looking up. The fact that job losses have been greatly reduced from the high of 750,000+ in early Spring should be some consolation to the unemployed. I guarantee they'd feel worse if the employment numbers were going in the other direction (up).

A turnaround does not happen immediately when the global economy was as bad as it was last Fall. It wasn't just a U.S. recession, it was global. These things time, but it's actually coming back sooner than many initially expected.

If you prefer being pessimistic, go stand in your closet and cry in the dark about how awful things are. Maybe that'll make you feel better.

[brentspeak]

18. What an absolutely snide, stupid remark

You began sort of reasonably -- then decided to end it by being a total idiot.

[FreakinDJ]

2. Makes me feel guilty

Financially - 1 of the best years ever for me. No I don't work in foreclosures

and my Retirement funds are surging ahead. I didn't get out quite early enough (Nov 1 2008) I felt some pain. But when Obama said there were some really great values I placed 1/2 my nest egg back in. When the markets drove the DJIA back to 7200 I dumped the other 1/2 back in. So far I've gained over 25% - and that is from mostly moderate investments.

The biggest loss to date has been the value of my home

[Kdillard]

4. Thanks Prosense as Krugman says I hope the forecast is accurate and while

I think he has a point about the Clinton years of growth we are not in the 90s anymore. Also we should not only be comparing it to the Clinton years but the Bush years to get an accurate picture of things. In any case we are headed in the right direction of growth that we will hopefully continue for the next few years.

[AngryAmish]

5. No one can predict the future

The economy might get better or it might not or might get worse.

Sound reassuring? It isn't. But at least it reflects reality.

[msongs]

6. would be nice to have higher interest rates on savings for those who actually save nt

[Lydia Leftcoast]

8. And a reinstatement of the usury laws so that those who borrowed

to make ends meet as their incomes fell have a hope of ever paying off their loans.

[johnaries]

11. I trust Krugman more than other economists.

But then again, we can't expect another "dot com" boom like we did under Clinton. At least I hope not, since it also led to the dot com bust.

But, then again, that graph he posted illustrates his point quite well.

[ProSense]

12. It's going to be interesting.

Reality is probably somewhere between Krugman and Maki.

[Clio the Leo]

14. I only trust him when it comes to health care matters....

.... otherwise, I question his judgement. (smile)

[AllentownJake]

15. .

:rofl:

[ProSense]

17. deleted n/t

[stevenleser]

19. Time to add this person to my ignore list.

[mcablue]

20. You forgot to mention another Nobel Prize winner who agrees with Krugman

Can we get another stimulus package and ignore the Republicans and their tax cuts this time please? From This Week, Paul Krugman agrees with his fellow Nobel laureate, Joseph Stiglitz that there is a good chance that the economy is going to contract in the second half of 2010. http://videocafe.crooksandliars.com/heather/krugman-agrees-stiglitz-reasonably-high-ch