Wednesday, August 12, 2009

Goldman Lays Out Economic Recovery Scenario

As we said a few weeks ago in "Emerging Markets Mirror U.S. Post-War Boom: Technical Analysis":
It all comes down to equity risk premium and economic growth rates. If the new normal for the U.S. is 2% vs. the historical 3 1/2% you'd better shave that point-and-a-half from your expectations....
From MarketBeat:

...Goldman expects annualized industrial production to rise 5%-6%, and for the ISM index to move above 50 within next couple months. In next six months, home sales, single-family starts and residential construction should all increase; retail sales should continue to rise at an average pace of 0.3% a month; and there should be a more definitive drop in jobless claims and a stabilization in payrolls.

The firm sees a 3% annualized GDP growth in the second half, then slowing to 2% in 1Q10.

That is not a V-shaped recovery.