I read an economic / geopolitical report this morning which was long, detailed, and very well presented. And buried deep down in the body of the report were a couple of paragraphs about the U.S. economy that made me feel good about what's in store as we head into the 3rd quarter.
First of all, I need to give credit where credit is due.
John Mauldin is a world renowned economist, who publishes a FREE weekly email. I've said many times before that this is one of the most important emails I read all week. You can subscribe to it here.
George Friedman is with Stratfor, and has some of the best geopolitical intelligence on the planet. Mauldin's Outside the Box newsletter features Stratfor's forecasts regularly, and I learn more from this one email than I could learn from watching CNN every day.
Anyway, buried in the body of Stratfor's Third Quarter 2008 Forecast was this little gem (and I'll quote directly from the newsletter):
Regional trend: Despite much talk to the contrary, the United States will enjoy strong economic performance. In part, this is because of the massive inflow of money into the United States from Asian and Arabian states.
While talk of recession in the United States remains par for the course, the U.S. Federal Reserve is both becoming optimistic and leaning toward interest rate increases to contain inflation. The Fed will always err on the side of triggering faster growth (and inflation with it) rather than slower growth that could lead to deflation and induce a Japanese-style depression. Add in roughly $100 billion in stimulus checks, and the United States is well past the worst that the slowdown of the latter half of 2007 presented. (emphasis mine.) This does not mean that the "strong economic performance" we anticipated has materialized — but the truth so far is much more positive than the doom-and-gloom talk that dominated American media the first half of the year.
Obviously, not all things are cheery. The American property market is far from recovery — the rising inventory of unsold homes in particular is a critical factor to watch — and strong commodity prices are making the U.S. consumer take pause. Additionally, a combination of American subprime contagion and regional structural and cyclical weaknesses could trigger a European banking crisis in the third quarter. But Stratfor's primary economic concern for U.S. growth remains tied to the election cycle. Neither presidential candidate has any interest in pointing out positive aspects of the current government's economic management. And, in past elections, "It's the Economy, Stupid" has not only garnered votes, but also has had the side effect of amplifying public perceptions of the economy's problems.
Of course I'd prefer to read that the housing market is well on its way to recovery, but at this point I'll take my good news where I can get it! We all know the market is cyclical and will heal with time – a better economy will help consumers' pocket books and consumer confidence, which in turn will help heal our housing market a little faster.
Your feeling better about the economy Realtor,
[tags] economic forecast [/tags]