2010 Predictions for the U.S. Economy?

[Mike from back east]

So, what are our predictions for 2010?

[bale002]

Originally Posted by Mike from back east

So, what are our predictions for 2010?

Let's take our little poll and analyze it a bit mathematically.

First, casting aside the "no opinions", there are 61 votes, which strictly speaking, is statistically significant, though the margin of error is relatively wide. However, since one economist's guess is as good as another's, we can take our little poll with two grains of salt instead of just one.

Now, we could aggregate and break down the numbers anyway we want, but here's one possibility.

- 34% have negative or very negative growth expectations, with a plurality of negative growth (14/61 = 23%)

- 30% have zero or very little growth expectations, with a plurality of 0.1%-0.9% growth (23%)

- 21% have moderate growth expectations (1%-2.9%), with a plurality of 1.0-1.9% growth (16%)

Combined, 46% have modest growth expectations of 0.0%-1.9%.

- 19% have significant growth expectations of 2.0%-4.0% or more.

Overall, then, I'd say the baseline scenario is growth in the upper end of the modest 0.1%-0.9% range, let's say a 46% chance.

The balance of risk is roughly equal between moderate/significant growth on the upside and a moderate double-dip recession on the downside, a 14.5% chance either way.

On the extreme end, roughly equal between strong growth (3.0%+), a 14% chance, and, let's say, a long-term structural depression (armageddon: i.e. with bread lines, energy and utilities rationing, riots in the streets, etc., or worse), an 11% chance.

From an investment perspective, I suppose we could say allocate: about 60% of your assets to income-producing investments, such as your own business, first of all, then bonds and dividend stocks; about 30% to general indexes/value/growth/speculative stocks; and 10% to gold, food and water hoarding, and ammunition.

Roughly reflects the average portfolio recommendation for a 40-50 year-old person, no?

Good Luck!

[lumbollo]

The only accurate statement that I see in your post is in your second sentence. Take the poll results with a grain of salt. i.e. they are irrelevant to what is going to happen and have no bearing on predictions on what will happen.

The fact of the matter is the USA's economy has some very serious issues that have been 25 - 30 years in the making where economic theory switched from a production economy to one based on consumption supported by the issuing and exporting of endless debt. It has reached perilous levels of irresponsibility at every level from the ones in control and profiting handsomly off the system to the other end where the masses have drank the koolaid that you can have the McMansion, SUV and Flat Screen TV without having to pay for it. Money just comes raining down from the sky. We are supposed to be consumers now. This is a description of what disease does. What is the end result of disease?

The system is at its breaking point and the only thing that can happen now is for it to break and deal with the carnage afterwards. Everything they have been doing over the past 12 months is nothing but delay tactics so it doesn't have to be dealt with until the next election cycle has passed.

My advice from an investment and wealth preservation scenario is to expect the worst not the best, stay away from any investment that is complicated and which you don't completely understand, paper is not an investment it is a gamble, and keep your investments local. Anything else, i.e. the less you control, your risk of losing it is higher and maybe guaranteed.