Too many people ask my opinion about the economy. Too many, because I view forecasting as voodoo.
However
I will suggest that 'other things being equal' meaning no significant
exogenous factors such as Iran bombing the Straits of Hormuz, or
similar economic tsunamis, the worst is not very bad.
I've said the bottom of the financial markets has passed, that has become clear to me by now.
The bottom of the residential real estate market has been reached in a dozen locations where the new economy exists, Bay Area, Colorado, Las Vegas, Phoenix, Texas, D.C. New York, Atlanta and Seattle. The rest, old economy, is going to go down for a few more months. The new economy is the same as the new blue chips: Intel, AT&T, Oracle, Pharma, Healthcare, private-for-profit education and telecom.
I expect the GDP to be down 2-4% in the first and maybe the second quarter but it will be positive by the 3rd quarter.
Unemployment
could keep rising to 8-9% by May but will start falling thereafter.
The U.S and Japan will be the first big economies to start growing.
The stock market will not climb very fast, investors will be leery for awhile.
The stimulus package is somewhere between harmless and inflationary. It will come too late, much too late, but the government investment in telecom will be worthwhile. A deficit is neither beneficial nor seriously harmful, based on the 1990 Japanese experience.
Tariff barriers would be suicidal, but even the union-owned-democrats aren't that stupid.
Good economic source here.