And what follows are some of the reasons why they're inclined to a less-than-exuberant outlook.
Consumer price inflation, they believe, will fade away, punctuated by periods of deflation. Unemployment will be chronically high, averaging at least 8% of the labor force. Working stiffs can expect dwindling pay raises, if any at all.
The pressure on paychecks and lack of jobs will worsen household debt service woes. Mortgage default will inexorably increase. Private credit extension will stay stunted.
The price of real estate, corporate equities, risky debt instruments, tangible business assets, trademarks, patents, art, antiquities and the like will bounce around, but wind up a good cut lower than they are today.
We're in for greater swings in the economy; expansions will tend to be shorter, recessions more disruptive.
The Levys also foresee more deterioration in international relations, as politicians around the world struggle to stay in power in the face of severe public dissatisfaction with the economy.
Or you could have the Earth Times version, from another erstwhile organization:
- Consumer price inflation will fade away, giving way to periods of deflation.
- Unemployment will be chronically high, averaging 8% or more over the next decade.
- Average pay raises will keep dwindling, maybe vanishing altogether.
- The mortgage default crisis will become much worse.
- Private credit extension will remain stunted.
- Asset prices will experience secular declines.
- Economic volatility will increase; expansions will tend to be shorter and recessions more disruptive.
- Trillion-dollar deficits are likely to persist for years.
- Around the world, popular protectionist sentiment will increase, and there will be no monolithic emerging market economic boom.
So why highlight the forecast?
Because it does a pretty good job of forecasting what won't happen!
So why does this lousy forecast get so much press? Because it's lousy!!
Three weeks after the market bottomed, (and also coincidentally when Doug Kass went from bullish to being bearish-maybe he's a reader!!) on March 31, when it was painfully obvious to anyone that we had bottomed, and the market was going higher, Levy touted this forecast that wouldn't make you a dime! Then, as in now, he was in the disbeliever camp.
Maybe they need some Tebow eye-black!
Because here is Levy 3:31!
"The economy is unlikely to turn up before the end of this year, if then, and its prospects for a recovery, once one is under way, remain seriously limited."
Levy cautions investors to be wary of signs of economic recovery, as various pieces of the economy are likely to bounce around quarter-to-quarter. Even as some “profit sources” are slowing, others are accelerating, says Levy. The overall trend in profits will be down for all of 2009 and likely well beyond.
There you go again!!
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