ISH Global Insight is looking for a U-shaped recovery: 2 percent growth in 3Q, 2.4 percent in 4Q and then 1.8 percent next year. This would be typical following a banking crisis/recession. I think this will make for a very unhappy electorate.
The main driver of growth in the second half of the year remains the turn in the inventory cycle. Firms will at first cut their inventories less rapidly, and then by the fourth quarter begin to add to them. The success of the “Cash for Clunkers” program is accentuating the cycle in the autos sector, as the surge in demand is depleting supplies of popular vehicles and manufacturers are raising their production plans in response. There is some growth payback in the first half of 2010, since we think that some of the Cash for Clunkers demand is pulling sales forward. In addition, compared with our July forecast, the turn in residential investment, business equipment spending, and exports begins earlier, helping the third and fourth quarters. But the forecast profile remains a U-shaped one, since it takes a long time (not until 2011 and 2012) to move into higher gear.
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James Pethokoukis is the Money & Politics columnist and blogger for Reuters where he covers the nexus of Washington and Wall Street.Previously he was the economics columnist and business editor at U.S.News & World Report magazine. Pethokoukis is also an official CNBC contributor and appears frequently on that network's Kudlow Report, Power Lunch, and The Call shows. In addition, he has appeared numerous times on MSNBC, Fox News Channel, Fox Business Network, CNN, and Nightly Business Report on PBS.
A 1989 graduate of Northwestern University where he double majored in Soviet politics and American history and a 1991 graduate of the Medill School of Journalism, Pethokoukis is a 2002 Jeopardy! champion. Pethokoukis can be reached at james.pethokoukis@thomsonreuters.com. James Pethokoukis Feeds Subscribe to all posts via RSS (What is RSS?) Recent Posts The case against Bernanke being reappointed as Fed chairman Another look at the VAT Turns out U.S. healthcare system is actually, like, really good GOP uses Dem playbook to kill healthcare reform The U.S. economy in the second half … and beyond Archives August 2009 July 2009 June 2009 May 2009 Blogroll Bizzy Blog Calafia Beach Pundit Capital Gains and Games Econbrowser EconLog Enterprise Fundmastery Instapundit Kudlow’s Money Politics Power Line RealClearMarkets Say Anything The Everyday Economist
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