Over at Zero Hedge, Tyler Durden notes that economists for Goldman Sachs and BofA are asserting a 4% GDP growth for 2011. Durden also goes in to some of the reasons why he thinks the economists have got it wrong – singling out the massive US debt as a big problem. I agree with that analysis – out debt load is crushing us and if it doesn’t usher in a collapse and Great Depression in 2011 its because it will happen in 2012 or 2013 (2015 or so at the latest, unless we swiftly get control of the debt). But what strikes me about the whole exercise is just how anyone can look at things and come forth with a happy prediction.
If you put the brightest face on it, unemployment is just as bad as it was on January 1, 2010. Since that date at least a million homes have been foreclosed on. Long term unemployment has become so bad over the past year that the government is having to develope new ways to track it. Businesses still aren’t hiring, for the most part, and when they do its all too often a temporary job.
Meanwhile, energy and food costs rose all year long. Gasoline was $2.65 a gallon on 1/1/10, now its $3.05. We’re supposed to get some stimulus out of the payroll tax cut, but my bet is that whatever boost we get from that (and its only for a year, anyway) will be absorbed by higher food and gas prices. People are having to use more of their disposable income for the basics, thus less demand for those things which are likely to really drive us out of recession – new homes, new appliances, new autos. I know that the “experts” are lauding the holiday shopping season, but please note that it was clothing which led the way while appliances and electronics were flat or down…and it took huge discounting to get people to shop, at all.
Maybe I’m wrong – maybe I’m too doom and gloom about the economy – but with our debt rising, China starting to feel the inflation pinch, Europe on the verge of sovereign default and our own debt, unemployment and hollowed-out manufacturing sector, I just don’t see much room for optimism. No way, that is, where I see us getting 4% growth – in other words, the sort of growth we need to really get out of this mess.
Here’s to a bit of hope for 2011…but I’m not confident of the result.
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