Here are some economic predictions I made at the start of 2008 –
1) Recessions -especially recessions that are anticipated and planned for always look worst at the beginning.
2) While some can cut spending the usual way for Govts is supply side (fed rate cuts) for more money , and demand side(Keynes) stimulus spending
3) Political costs is always a key policy decider in economic slow downs. We may see more bi partisan ship as parties work together for welfare projects in an election year
Basically the only prediction that I got correct was Number 9 –
9) We will have more interesting 2008 than 2007. That’s the economist in me speaking. As Alan Greenspan wrote we will live in the age of turbulence.
In fact that was the only thing Alan and I got correct the whole year , though I did switch to Keynesian spending in June , that’s before Ben Bernanke did but about 15 years after Paul Krugman did.
Anyway here are some economic predictions for 2009 ( economists , even pretend ones like me are rather stubborn)
)0( Price of Oil and Commodities will rebound by end of quarter 1. This would also be impacted by the auto industry in 2 months time and any consolidation there.
1) Entertaintment business will continue to grow. It may thrive as people have more time and more reason to get cheered up.Expect more shift to the web though not in the degree expected.Online entertainment will further evolve. Expect more profitable online communities.
2) War focuses will shift from Iraq to Afghan-Pakistan ( it already has).Expect some more rumbles and surprises there.
3) Barack Obama (Time ‘s Man of 2008) will disappoint some people all the time and all people some of the time.I expect his honeymoon with the media to last till March 2009.
4) The US will have an auto industry that may change in 2009 to something leaner.
But it is overdue. And the industry is not known for change.
5) Out of the rubble, expect the next big thing like Google from 2001.
6) The next boom and crash will depend on how much central banks will learn from this
time’s crisis in reacting promptly.
7) China will have a major export meltdown , so expect focus either to shift to domestic industry or some social upheaval. India will have an election due in April-June so expect the politicians there to bend over backwards to curb inflation ( remember it used to be a problem) and increase growth.
8) Banks will lend more this year and the bounce should start by q3. This is a great time to buy stocks, and land . ( I am doing that right now).
9) Watch out for terrorism and technology to give the usual nasty and good surprises respectively. Especially in a transitional flux around the geo politics of the globe.
10) If I get 5 out of the above predictions correct – I will be surprised. The last is an easy one- people will break their New Year’s resolutions sooner than later.
Have a Happy New Year in 2009.
Dont worry about it too much. There will be a 2010 , as always.