Friday, August 27, 2010

Just "What If" We Enter a 1 per cent per Year Growth Period?


This article by Rick Newman from US News and World Report is worth reading for a general overview of what to expect and how to prepare and invest if, in fact, the U.S. really entered a 1 per cent per year period of growth for the next 20 years:

How To Survive a 'Zombie Economy'

Imagine if the U.S. economy grew just 1 percent per year over the next 20 years. The Dow Jones Industrial Average would plunge by 60 percent, to less than 4000. The average price of a home would fall by nearly 50 percent, from $184,000 to about $100,000. The economic carnage would make the Great Recession seem gentle, upending families, devastating communities, and transforming America for generations...read more.

Please do yourself a favor and read the whole article. But, I have a quote from Calculated Risk this week who doesn't see the future as quite so bleak as that. And I do regard his analysis highly.
...Note: I still think the economy will avoid a technical double-dip recession, but the odds are uncomfortably high - and it will probably feel like a recession to millions of Americans. It will be especially discouraging - if I'm correct - when the unemployment rate starts increasing again, and when reported house prices start falling again.