A True look from the Federation of Independet Business; not growing

1. 60

   dutchman1951posted 14 years ago

   Where is the Economy Going? It is not Growing, not producing recovery, we are worse off now than before. The report is below.
   
   Most people instinctively feel the economy is not
   doing well. They see the near 10% unemployment
   rate, lackluster business results, mixed stock market
   returns and other indicators. What do the coming
   months hold for the economy?
   
   Let’s take a look at the recent past:
   
   Consumer confidence /demand / Total demand is low.
   The average American balance sheet is much worse
   now than it was just 3 years ago.  Their investment
   portfolio is perhaps 20% lower than it was. Their
   home may be worth 20% less on average than it was
   4 years ago. They may have a job that is insecure with
   uncertain salary growth, or they may be unemployed. 
   Their net worth is lower, and their debt is a higher
   proportion of their assets, (or they may be a net
   debtor). Of course, they are trying to rebuild their
   balance sheets, primarily by being very cautious
   spenders.
   
   For businesses, since the beginning of the recession
   in Q4 of 2008, which began with a huge shock to the
   system, business performance has tread water for the
   most part.  GDP has barely returned to its’ 2007
   level*. Most businesses are performing modestly at
   best, with very modest growth levels since 2008 on
   average. A recent survey by the NFIB** showed most
   of their indicators at neutral or negative readings.
   Most other business forecasting indices are not much
   better. Most business balance sheets have
   deteriorated along with their earnings since 2008.
   
   Credit/Capital markets have not returned to normal.
   Some businesses are having trouble raising capital. 
   Small businesses and especially new businesses are
   reporting a much harder time getting funds. But even
   given this, many businesses report they don’t want to
   borrow funds, as they do not have adequate
   demand/revenue to justify and pay them back. 
   
   Of course the Fed has flooded the banking system
   with funds through low/zero interest rate borrowing to
   the banks. And the federal government has spent
   billions through the stimulus package. Of course,
   besides this being good for the banks themselves,
   this has really only trickled down to large businesses,
   if any. The stimulus funds have been primarily used to
   keep state and local governments going, which may
   be better than the alternative, but has done close to
   nothing to advance investment in business.
   
   Given this, what do the coming months hold?
   
   I predict very low positive growth over the coming
   months, with GDP in the 1 or 2% range through the
   rest of 2010. This will slowly build to a more robust
   recovery in 2011. The stock market will grow by a few
   percent the rest of this year.  Unemployment will slowly
   edge down, ending the year close to 9.0%, not
   returning to more normal levels (6-7%) until the end of
   2011 or 2012.  Of course, the federal budget deficit is
   increasing at an alarming pace. Given current
   deflationary pressures, I don’t believe it’s a huge
   problem now, but government inflows/outflows will
   need to be brought closer in line as the country comes
   out of recession or that will jeopardize any recovery in
   the future. 
   
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   * In all of 2009, nominal GDP was essentially zero,
   although it rose to 5.7% in Q4. It decelerated in Q1
   2010 to 2.7%, and the forecast for the remainder of
   2010 is lower.
   Nominal US GDP declined 1.9% in 2008, the biggest
   decline since 1946. It had previously risen 2.1% in
   2007, which was already anemic.
   
   ** National Federation of Independent Business 
   
   
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2. 67

   Flightkeeperposted 14 years ago

   Shhhh! Dutchman, why are you trying to spoil Obama's illusion?
   
   

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