What do you think of these predictions?

[Kurt_and_Hunter]

Treasury's Baseline Estimates
(These are the baseline predictions from which the bank stress test numbers are derived)

GDP:
2009 (-2.0%)
2010 +2.1

UNEMPLOYMENT:
2009 8.4%
2010 8.8%

HOUSING PRICES:
2009 (-14%)
2010 (-4%)

http://www.fdic.gov/news/news/press/2009/pr09025a.pdf

[David Dunham]

1. They may be too optomistic

[Kurt_and_Hunter]

4. Agreed

All our aggregate economic projections every step of the way have been conservative to the point of irrelevancy.

The problem lies with the nature of economic projections more than a problem with Geithner or Obama.

Consensus projections are, by their nature, conservative. And economists are conservative when making predictions.

The result is numbers that are almost designed to miss precisely the sort of dramatic eventualities of most interest to policy makers.

[grantcart]

8. They will never make +2% unless . . . .

oil were to drop to $ 1.50 per gallon - not an impossibility with the volitale market and oil now trading at $ 42. per barrel.

If it heads down to $25 it could help trigger a rebound, and producers in the far east may decide to keep production up just to show support for Obama and his new internationalist position, and the possibility of a solution in the mid east.


The other side of this would depend on the eruption of small alternative energy producers starting to gain traction in the next 6 months. Apparently there is a pent up demand for investment dollars and there are thousands of small producers who are waiting for positive government policy and financing. Good thing Sec Chu is on board to make the connection.

[Kurt_and_Hunter]

9. Or they could reach 2.0 via further action, of course

The fiscal responsibility summit aside, assuming Obama is doing focus-grouped pandering to idiots and doesn't actually believe any of that nonsense (which is by no means determined, unfortunately) we could reach 2.0 by brute force via further and direct stimulus.

Jump on consumer debt with both feet. Pure demand-side.

(I am a broken record on this, I know.)

[scheming daemons]

7. I think it is too pessimistic, actually

I think it turns around quicker.

I think the housing bottom happens this summer.



The unemployment numbers are probably close to accurate. But the housing and GDP numbers are a little too pessimistic.


Currently we are in the midst of "irrational fear"..... the counterweight to the "irrational exhuberance" of a couple years ago.

The market is oversold. Banks are being killed by short-sellers, and I predict that the SEC will reinstate the uptick rule and the short-selling will come to a halt.

Removing the uptick rule means the Dow will be at 9,000 a year from now.... and 10,000 2 years from now.


Christopher Cox is gone.... I think the SEC will act to cut the bank stock short-sellers off at the knees.

[rucky]

2. Yikes! That's the "less adverse" scenario?!@

If the GDP and Unemployment are expected to rise, what does that mean? Less Americans will be more productive?

[Kurt_and_Hunter]

6. If companies are operating below capacity...

If companies are operating below capacity today they could pick up a lot of slack before needing new hires.(?)

[Skip Intro]

3. On housing prices, when they say -4% in '10, that would be 4% off the '09 14% loss right?

I mean, it looks like such a better number, though still negative, but there isn't some baseline for those projections, right? '09's -14% is off the already deflated '08 prices, going back, and '10's -4% is relative only to the '09 prices, yes?

I mean, at some point there is a bottom, and these numbers suggest some anticipate approaching a bottom housing prices next year, but '10's drop on top of '09's drop on top of '08's drop on top of '07's drop, etc, makes it a little hard to smile about, imho.

[Kurt_and_Hunter]

5. Yes, minus 17.44% total 2009-2010

(Not an even 18% because I am assuming that 2010 is 96% of already reduced 2009 pricing)

[Occam Bandage]

10. Well, that would be nice. nt