THE ENERGIZER BUNNY IS IN DIRE NEED OF A BATTERY RE-CHARGE

Posted by Index Protrader Services at 11/23/2007 12:02 PM
Categories: Resources and Information


Paul Kasriel argues rather persuasively that accepted economic growth projections may be wildly optimistic.--Pro Trader

With the 3.9% “first print” of annualized real gross domestic product (GDP) growth for the third quarter and expectations that the “second print” will be close to 5%, some have compared the U.S. economy to the Energizer Bunny. Well, we believe the Bunny’s recent sprint has drained its battery and it is on the verge slowing to a crawl, if not actually falling over backwards. That is, we believe real GDP over the five quarters ended fourth quarter 2008 will grow at a compound annual rate of just 1.6%. And even that slow growth is dependent on a Fed battery recharge of about 100 basis points. For the record, we have scaled back our real GDP growth forecast for 2008 from last month’s 2.0% on a fourth quarter-to-fourth quarter basis to 1.7%. And we have lowered our terminal federal funds rate forecast from 4.25% to 3.50%.

For complete article go to: Financial Sense Editorials

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