From a Top Rate Economic Forecaster

  • $500-700 billion stimulus package will solve the problem.
  • $15-30 billion in low-interest loans to auto makers should be enough.
  • The worst recession in 50 years.
  • Recession will last 24 months, ending in December, 2009. (This is a change from his April prediction that it would last only 12-18 months.)
  • Unemployment will peak at 9%, early in 2010.
  • Cumulative falling output – peak to trough – 4%, worst in 50 years.
  • S&P 500 price/earnings ratio to fall to 10-12.
  • S&P 500 index to fall to 600 (about 6000 in Dow Industrials). This is a change from an October prediction of a fall to 7000 in 2009.
  • Equities will fall another 20%, start to recover at end of 2009.
  • Credit losses close to $2 trillion.
  • The bright spot is that policy makers are moving aggressively.
  • Weaker dollar in 2009.
  • Commodity prices have already fallen 30% since summer, and will fall another 15-20%.

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