US new home sales might be soaring and people like Federal Reserve chief Ben Bernanke reckon the recovery might begin this year, as do a number of economists, but don't hold your breath.
The people at the coal face, the chief financial officers, have not yet jumped on the recovery bandwagon. According to the CFO Prediction Market, reported here, one in three don't see growth returning until the fourth quarter, as opposed to the third predicted by many economists with as many as 17% saying a rebound won't happen until the second quarter of 2010. They predict US unemployment will reach at least 9.98% with some even saying it could hit double digits. And if that happens, you can kiss good bye to recovery because people will not be spending.
Huffington Post columnist Dan Dorfman says we could be looking at at a double dip recession where there is a slight recovery before we slide back again as the economic starts to wear thin. Unless of course, the US Government comes up with another stimulus package.
What that means is that the days of high spending excess are now history. Middle class consumption driven by spending on clothes, travel and bigger cars will be replaced by a new frugality and more savings. It's a point I examine in my Management Line blog here.
If it's not frugal times forever, it will certainly feel that way for many years.
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