The Nation’s Economic Outlook

THE NATION’S ECONOMIC OUTLOOK By Jack Malehorn ECONOMY DOWN…OUTLOOK TEPID T T he Consensus Outlook is noticeably downbeat. An unprecedented cluster of abnormal events such as disarray within the banking system, a convincingly troubled automotive market, and plummeting consumer confidence has enveloped the economy. In response, an unparalleled combination of Fiscal and Monetary Policy instruments have been unleashed with no one in agreement as to what their impact will be on the faltering economy. The Consensus calls for real GDP to advance at an anemic 0.9% for the year. However, Rajeev Dhawan, Director of Georgia State University’s Economic Forecasting Center expects real growth to decline by 3.0% in 2009, and another 0.2% in 2010; he does not expect a rebound to a sub-par level of 1.8% until 2011. Dr. Dhawan’s outlook is linked specifically to the nation’s banking system. Even in light of the aggressive stimulus plan and fluid Monetary Policy, Dhawan believes all are to no avail until the toxic debt in the banking system is cleaned up. Only then will credit flow and investment activity begin to generate positive econ omic growth. According to Dhawan, the recession will ...