The Nation's Economic Outlook

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SPRING 2010 OUTLOOK ... THE CONSENSUS EXHIBITS SUBDUED GROWTH

The Consensus forecasts exhibit subdued growth of recovery. John Silvia, Chief Economist of Wells Fargo, cites production and sales growth are not robust but recovering, and job growth is difficult at best. Mark Zandi, Chief Economist at MoodyEconomy.com, believes a continuation of aggressive fiscal and monetary policy is in order to stave off the possibility of the recovery faltering. In short, Zandi believes a selfsustaining recovery will not occur without aggressive and continued support of policy makers and the Federal Reserve. Rajeev Dhawan, Director of Georgia State University Economic Forecasting Center, says, "Previous sharp recoveries were accompanied by a strong recovery in jobs - a situation that is notably absent at present as investment spending that leads to job growth continues to be weak." A perilous journey appears underway as the nation fights off the weight of the downturn realizing it could be knocked back down at the slightest problem. Subsequently, the Consensus is calling for real growth in GDP at 2 percent.

THE CONSUMER

Contemplating the resiliency of a recovery without the full support of the consumer seems unusual. After all, households account for roughly 2/3 of all economic activity. Still, the Consensus expects Personal Disposable Income and Personal Consumption Expenditures to increase at a modest rate of 2 percent, well below past recoveries rate. Here again, we are reminded that this recovery is taking on a very different form. Consumer confidence is shaky and the absence of any good news emanating from labor markets will keep consumers quite repressed in their spending plans. John Silvia makes note of the rebalancing of American Household balance sheets and the limitations on credit availability Evidence of this is as close as the Consensus forecasts of unemployment rates throughout the entire forecast period stretching from spring 2010 until spring next year. During this time, the Consensus is calling for unemployment to fall only marginally. The Consensus is calling for auto sales to increase but again at a less than robust pace. And finally the sector that has served as a major drag on the economy - housing - is expected to show only very modest improvement.

THE FIRM

Business investment is expected to pick up by a modest 3. …