Economic Predictions for 2009

Generali

Generali wrote: »

I reckon by year end 2009:

- UK GDP down 2 - 3%
- UK unemployment up to 3,000,000 or pretty close
- Interest rates > 0%
- Mild deflation
- RBS nationalised
- Government having to cut spending as they can't get away the Gilts issues that they would like
- Falling consumption due to continuing unavailability of credit
-Possible minor shortages of non-essential items as the trade deficit becomes harder to finance

In summary, pretty bad but not apocalyptic.

It's little more than a guess though really although a bit of fun putting it together. I suspect Obama's going to turn out to be a protectionist. If there are protectionist policies introduced then things will get very bad quickly.

How did I do?

Well GDP is down over 5% over the year so I got that wrong by being too optimistic. Unemployment went up substantially but 3,000,000 was too pessimistic.

Interest rates are low and the RPI entered negative territory although deflation is too strong a word. RBS was (almost) nationalised and both Labour and Tory have said they'll have to cut spending although it hasn't actually happened. Consumer credit has fallen and the consumer is having a hard time of things.

There have been no problems financing the trade deficit. I was just plain wrong on that one.

The summary was accurate I reckon: pretty bad but not apocalyptic. Oh and Obama does seem to be a protectionist: he's put tariffs on several Chinese products albeit without any bad outcomes so far.

dave4545454

miles off on the unemployment prediction, it's over 6million now

Cleaver

dave4545454 wrote: »

miles off on the unemployment prediction, it's over 6million now

I think Generali was refering to the official numbers, rather than the made-up conspiracy ones.

markharding557

the official unemployment figures are the made up ones

Radiantsoul

Radiantsoul wrote: »

Inflation to reach zero in May 2009 before rising again.
House prices to fall 2% per month till May-June, this will then slow to 1% for a few more months before house prices stabilise at the end of the year
Interest rates unlikely to be cut till March or April. I think there is probably only one more cut remaining and then rises are on the way(probably up to 6-7% in 3 or 4 years time).
Unemployment to rise sharply in the first half of the year.
Oil prices to remain below $50 except for the odd short term shock.
Government to introduce further capital into the banks.
Share prices to continue to fall although at a slower rate than last year
Commercial property prices to tank and thereby cause large losses in bank shares.

Overall I suspect enhanced credit, an expansionary US, strong fiscal and monetary stimulus and the disappears of the chance a systemic collapse in the banking system to increase confidence. Oversupply in some markets will force down producer prices and so offer opportunities(for example if rental on shops fall by half then it might be a good time to open a restaurant). I suspect the economy will begin to recover in Q4.

I suppose I got the Q4 recovery right.
I though interest rates would fall from 1.5% to 1% in March/April, and that the next move would be up - although I didn't predict this for 2009.

I think I predicted a deeper depression with lower inflation, employment, commodity prices and property prices. Last year people were predicting a real depression, which hasn't really happened.

Things are not really as bad here as in Ireland. Not sure if that is the result of fiscal/monetary stimulus - although both have been slightly greater than I probably envisaged..

Radiantsoul

markharding557 wrote: »

the official unemployment figures are the made up ones

You could argue that same thing about the Iraq war.

dave4545454

Cleaver wrote: »

I think Generali was refering to the official numbers, rather than the made-up conspiracy ones.

the "official" ones are the made up figures

http://www.telegraph.co.uk/news/newstopics/politics/6044530/Six-million-British-adults-on-benefits.html

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