In a Forbes article titled A 'Jobless' and 'Wageless' Recovery?, Nouriel Roubini updates his economic forecast for the U. S. for the "out" months and years. Regardless of both his incorrect stock market call this winter and spring that the rally would fizzle, he was to date quite correct this past winter regarding the horrendous job losses the U. S. economy has experienced, which have continued through the latest reporting period. Here is his conclusion. Of great interest is that whilst he is well aware that the ECRI has pounded the table for rapid growth ahead, and has debated its leader Dr. Achuthan before, Nouriel is unwilling even to sign off that the economic downturn will end this year. Here is the Roubini conclusion:
Sluggish Recovery Ahead
It is very difficult to argue that the U.S. economy is not still in a recession while the labor market is still weak. But the interesting question is not whether the U.S. economy is still technically in a recession, or whether the recession will end in Q3 2009 or Q4 2009--or later. What is interesting is understanding the implications of this severe downturn and financial crisis for the recovery.
Any sustained and strong improvement in growth has to come from a revival in private demand, and not from temporary factors like inventory adjustment and policy measures. The U.S. consumer, who, as we've noted, still accounts for close to 70% of GDP, is pulling back. Investment, which still trails consumer spending at home, will be weak. Exports will be a source of growth only in the medium term. In the short term, the rest of the world will remain dependent on the U.S. to drive demand while consumption abroad will be unable to offset the decline in U.S. consumption.
These factors suggest a sluggish economic recovery for the U.S. in the coming years until new sources of growth emerge (such as exports to emerging markets, investment, new energy and technology). Factors such as unsustainable public debt, higher structural unemployment, lower credit growth and higher taxes in the future will also constrain growth.
His article has several informative long term graphs. I recommend it for them alone. Whatever the future holds, current prices for stocks and bonds are likely not predictive of said future. The DoctoRx point of view is that there is just too much government intervention propping up the economy to induce the long-term confidence serious investors require to commit substantial funds and personal effort to economically sensitive matters.
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