Reading reports this morning, all fairly upbeat. Unemployment will drag in 2011, Deficit spending by the Government…it looks like it’s up to the private sector to clean up the mess. Don’t tax the hell out of us and we can get it done. Here’s what I am reading:
“…Once the details(extending Bush-era tax cuts, payroll tax rductions and renew emergency unemployment benefits) are ironed out and some semblance of the package passes, most economists agree that GDP growth should get a slight boost in the coming year. This is indeed good news as the pullback in federal government spending next year was one of the major challenges for economic growth. We now expect real GDP to grow at a 2.6 percent annual pace in 2011.”
“not enough to bring the unemployment rate significantly lower. The unemployment rate should remain stubbornly above 9 percent well into 2012…While an obstinately high unemployment rate seems daunting, there are clear signs employment is improving.”

On Housing starts:
“We expect housing starts increased slightly to 540,000 in November due to continued low mortgage rates and some payback from the disappointing levels observed last month. Our forecast continues to indicate that housing starts have bottomed out, but new starts are estimated to total only 560,000 in the fourth quarter of this year.”

“Despite the challenges that face us, we have put the most arduous portion of our journey behind us. We have turned the corner, and for the year ahead, we believe sustained growth will reflect the influence of continued improvements in consumer
and business investment as well as the turnaround in residential and commercial construction. We anticipate a change in the composition of growth with less inventory gains and federal spending and greater support for growth from final private demand. Over the next two years, we expect the U.S. economy to grow by 2.6 percent and 3.3 percent in 2012.”

Source: Wells Fargo Securities 12.10.10