Team-Obama has got this thing. New economic projections show quick turn-around

[Kurt_and_Hunter]

The latest Obama administration projections show us getting out of this thing without too much damage. Positive GDP by January 2010. Unemployment never breaking 9%. Housing down only 4% in 2010.

Treasury's Baseline Estimates
(These are the baseline predictions released yesterday 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

[tekisui]

1. Impressive recovery, if it holds.

[Uzybone]

2. Lets hope so

for the country's sake as well.

[endarkenment]

3. Rather optimistic, in my opinion.

[On the Road]

4. One Can Only Hope

The sense of impending catastrophe is no more trustworthy than the irrational exuberance of the bubble.

[kestrel91316]

5. Hey, you heard it from me 2-3 weeks ago. I'm TELLIN' ya:

things are turning around. I am gonna finish this month up 25-30% from Jan. I know, I should pull up the numbers on LAST Feb to compare, but this month has has an eerily upbeat feel to it. Feb is NEVER busier than Jan for me. My clients simply aren't afraid for their futures anymore like they were.

Half this country's problem is that thing FDR warned us about: fear.

I really hope I'm right about this. It's been a rough 2+ years and it has quadrupled my gray hairs.

[blueclown]

6. The unemployment rate is growing at a rate of .5% per month.

By summer, the unemployment rate should be around the range they are predicting for the entirety of 2009.

They are far too optimistic.

[FrenchieCat]

7. They are correct, as the growth they predict will be based on

after the economy has bottomed out in 2009....meaning coming off of the low numbers won't take as much effort to show growth as one would think.

[AllentownJake]

12. Bottom?

We haven't even begun to see the bottom of this thing.

[FrenchieCat]

18. You don't know, you are only surmizing.......

And we are only in the Month of February, so I'm not sure what you thought I said, but if you read it again, I said IN 2009, not as of this moment.....that leaves approx 9 months to hit bottom. Duh!

[AllentownJake]

21. If we hit "bottom" in 2009

All we are doing is kicking the can for 2 years for another bubble and crash.

[Occam Bandage]

8. I'll wait until there are signs the projections are based in reality before cheering them. nt

[AllentownJake]

16. If this recovers this quickly

and we don't make fundamental changes as a nation all we are doing is kicking the can for 2-3 years.

[Kurt_and_Hunter]

19. Reality sucks. Fantasy rocks. Yet you chose reality... talk about a bad attitude!

:hi:

I find these numbers fascinating and have tried a couple of times to elicit comment on them with limited success.

Presenting them as an administration accomplishment seems to bring out more discussion, pro and con.

[Occam Bandage]

22. I figured it might be something like that;

You're more of a Cassandra than a Pollyanna, after all.

[Zynx]

9. We had better grow in 2010.

Otherwise there will be quite some difficulty.

[AllentownJake]

11. Get prepared it

No one is willing to say it because they are afraid to be honest. America is fucking broke.

[AllentownJake]

10. Sorry I don't buy it, Here is why

At the end of the day we still consume 80% of the worlds savings and are 5% of the world's population. Our trade deficit will still be over a half trillion dollars this year despite our failing economy. If the economy rises and manufacturing gears up again we will have another gas price crisis within 5 months which will just kick start the bankruptcys again.

Vulnerable manufacturing areas in this country are shutting down their plants. The owners of these plants have no desire to reopen them in America. They are going to use this economic downturn as an excuse to move the manufacturing to 3rd world countries or China.

The stock market is down and baby boomers are starting to retire pulling money out of their 401(k)s and pensions. All those are backed by stocks which means that the stock market will be going down. Less baby boomers are going to be willing to retire because their retirement funds have been depleted which will give employers a choice between forcing them to retire or not hiring younger workers. The days of having retired people out there taking trips and spending as much on their grandchildren are over.

Housing is still overvalued. The ownership society is over and we have too many houses.

Oh yeah and there is that little matter of China and Japan holding huge amounts of dollars with incentives to dump them. China to purchase assets around the world for their own growth while the currency still has value and the assets are cheap and Japan because their economy is collapsing just as bad as ours.

In short we are fucking broke. This isn't something you recover from in one year.

[CreekDog]

13. 2 of my close friends here in the Bay Area bought houses in February

hey, it's something. :shrug:

[wryter2000]

15. They were smart

Values will go down more, but eventually, they'll go back up. Your friends have made a good investment if they got good mortgages. Besides, this is a fabulous place to live. (I'm in Oaktown.)

[wryter2000]

14. Make it so

If he can show real progress in two years, we can look forward to another 6 of an Obama administration. That's what we all need.

[backscatter712]

17. Cross your fingers...

These look good - if Obama's numbers hold, meaning the stimulus worked, and all of Obama's other initiatives to deal with the economy worked, we may have avoided the worst of the Bush Depression.

[Study420]

20. Just a thought. post at will.

   The government is giving GM 14 Billion dollars and
potentially more. How about the humble GM takes that money and
buy back as many of these upside down gas hogs we can no
longer as a country, afford to drive. As they simultaneously
make and sell us cars that are American first off, secondly
they have to be electric or burn clean abundant fuel, last
let's see if we can take this and run with it. 

   We could take the money we gave to the banks and build
homes that could charge our cars using things we already have
like solar panels and wind energy. The homes could be entirely
green friendly. We could make them affordable too, utilizing
the penal system, we could teach non-violent offenders a trade
so they don't have to do illegal things to make money when
they get out stopping the vicious cycle. after all isn't this
country the land of the free, but everyone knows when your
broke it sure doesn't feel that way. So let's put some money
in everyone's pocket, make the planet a better place, and
preserve it for our children!This is not imposable, it would
create millions of jobs and liberate a sinking society. 

  I truly believe this can work...do you?

[Cash_thatswhatiwant]

23. lets hope thats true. nt

[Baikonour]

24. If this is true...

Then republicans can kiss 2012 away...and 2016...and 2020...and 2024...you get my point.

[anaxarchos]

25. Actually, that's not much of a "recovery"...

The prediction is for more of a "bottoming-out" in 2009. Maybe it will happen and maybe it won't. The treasury numbers are close to the Congressional Budget Office numbers from this January:

GDP:
2009 (-2.2%)
2010 +1.5

UNEMPLOYMENT:
2009 8.3%
2010 9.0%

HOUSING PRICES:
2009 (-14%)
2010 (-3.8%)

http://www.cbo.gov/ftpdocs/99xx/doc9958/01-08-Outlook_Testimony.pdf

The difference is in the forecasting of the impact (rather small) of the Stimulus package which Treasury forecasts but CBO doesn't. The CBO summary on the slowness of the recovery reads as follows:

"Normally, sharp contractions in economic activity are followed
by rapid rebounds, but this forecast anticipates that
the recovery in 2010 will be slow for a number of reasons.
Although financial conditions are expected to improve,
the pace of improvement will be restrained because it will
take time for financial institutions to recover from losses
due to loan defaults. As a result, borrowers will continue
to find the terms and availability of credit tight, which
will increase the cost of capital and hold back the growth
of investment and consumption, dampening economic
activity for several years. Similarly, the excess supply of
vacant houses is expected to suppress the typical rebound
in housing construction next year. Spending also will be
muted as households continue to adjust to the large
declines in wealth of the past few years. Last, foreign
economies will not provide an offsetting boost in
demand: Although economic growth overseas remained
strong during the housing collapse of 2007 and 2008,
providing support to U.S. producers, those economies are
now weakening and are likely to restrain the U.S. recovery
in 2010."

Of course the above will get far worse when the big steaming pile of cash which has been released to fight the recession, will be sucked back in at the first hint of the dreaded inflation. This is doubly true because Larry Summers and Company all cut their teeth on IMF and World Bank economics. In general, prepare to be IMF'ed, fellow Argentines...

But the worst news here is the direction of travel of the projections. The same CBO projections were as follows only three months earlier (September, 2008):

GDP:
2009 +1.1
2010 +3.6

UNEMPLOYMENT:
2009 6.2
2010 6.1

HOUSING PRICES:
2009 (-9.0)
2010 +4.5

THe adjustment, downward, since September is unprecedented. Since January, the economics data has been terrible. I suspect that both data sets will be revised downward again in the next iteration - and that's if another shoe doesn't drop.

Hold on to your hats...

[anaxarchos]

26. What a difference a day makes...

The GDP drop today makes even what I wrote moot.