| Not that I believe this, but if the economy does start to recover in mid 2010 you can be sure Bambi and the Dhimmicrats will jump all over it. This is why the Pubs and Tea Party folks had better be focused on spending, corruption and deficits and not just the failing economy. |
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. The rate will reach about 9 percent by the end of 2010, he said today in a Bloomberg Television interview.
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.
"One area that we put more weight on perhaps than others is the stock market," he said in a telephone interview last week. The 67 percent gain in the Standard & Poor's 500 Index since a 12-year low on March 9 has helped shore up family balance sheets, putting Americans in a better position to spend. "That's going to help consumer spending as we move through 2010," he said today in a separate interview with Bloomberg Television.
The prospects for a stronger rebound are consistent with recoveries from past recessions, he said.
"We don't believe this time is different from all other business cycles," said Maki. "The consensus view that growth will stay subdued all through next year—there's no parallel to that in modern U.S. history."
Maki's forecast for 2010 is among the highest of the 58 economists in a Bloomberg News survey this month. He is more optimistic than Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. (GS) in New York, who was No. 1 among forecasters of GDP during the 12 months through June 2009. Hatzius, 41, estimates the economy will expand 2.4 percent in 2010, and his 2.5 percent first-quarter growth forecast is half the pace Maki anticipates.
