Busted: Bankers and The Global Economy

January 12, 2009

Real Expectations for U.S. Jobs and Economy

lowering expectations

lowering expectations

When compared to the political wisdom being spread about in Washington, D.C. recently, the Federal Reserve, the government watchdog for the U.S. economy stands out in contrast. At the last FOMC meeting, the Fed admitted that

“real GDP was expected to fall much more sharply in the first half of 2009 than previously anticipated, before slowly recovering over the remainder of the year as the stimulus from monetary and assumed fiscal policy actions gained traction and the turmoil in the financial system began to recede. Real GDP was projected to decline for 2009 as a whole and to rise at a pace slightly above the rate of potential growth in 2010.”

Assuming that the Federal Reserve economists have a reasonable stock of knowledge and considering their typically conservative stance in reporting, 2009 and 2010 are projected to be economically anemic years in the United States.

“Amid the weaker outlook for economic activity over the next year, the unemployment rate was likely to rise significantly into 2010, to a level higher than projected at the time of the October 28-29 FOMC meeting.”

This contrasts greatly with the latest picture painted by politicians that seem to be mostly interested in drumming up a little fresh faith in view of declining business and consumer confidence.

Most participants at the Fed meeting projected that the economy would begin to recover slowly in the second half of 2009 because of the anticipated stimulus and easing of Fed monetary policy. As I have been saying for some time, plenty of uncertainty remains regarding the economic outlook with additional downside risks because of economic weakness.

American Dream

American Dream

As of late, recently falling prices have began to climb once again, putting additional pressure on the economy. Moderating prices will be essential to keeping the economy stabilized at current levels. A spike in prices, especially in fuel is likely to create an unavoidable economic depression, resulting in additional business bankruptcies and a continued exponential loss of jobs in the economy. Ongoing foreclosures this year due to ARM resets and the like also create a real threat to any measure of economic stability this year since the U.S. government has failed in basic actions to support U.S. foreclosure prevention. House prices will continue to fall in the current housing market correction to pre-Bush administration levels.

Barack Obama has stated that America will experience the necessity of sacrifice and this observation should ring true. Generally, lifestyle expectations should be lowered for the term. Instead of looking for government supports and corporate employment, which will be strongly lacking, Americans should seek to employ themselves in order to make ends meet, even though this idea is unpopular in government circles because of taxation control issues. The idea being promoted by the media of attending college in an effort to build up job qualifications during unemployment is a fantasy for the majority. Americans are faced with a decline in available school financing, creditworthiness and available income for such endeavors. Such efforts, if possible, will largely be a distraction and a temporary exercise in hope for the few. The strain on the American lifestyle on any level will continue to be significant for most. ~ E. Manning

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