Monday, 9 January 2006

Muddle through 2006

I could write my forecasts for 2006. But this being a Monday, I'll just link to John Mauldin's forecasts instead. His forecasts cover the US economy, global economy, currencies, interest rates, housing, stocks and commodities. Excerpt:

I define what I call a "Muddle Through Economy" as an economy that grows below trend...

By the end of this year, I think we will see growth slow into Muddle Through territory. Clearly, a slowdown will not be good for the US stock market. Last year I said the market would be flat with risk to the downside. This year I think the market actually ends the year down, and by at least 10% or more during the year...

By the end of the year, consumer spending is going to slow down as the "wealth effect" from both housing and stocks becomes negative. Enough to put us into recession? I don't think so, at least not this year. But it will slow the economy down. Thus, I think it is quite possible that Bernanke actually starts to lower rates before the end of the year.

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