Stone & McCarthy suggest: Make it to March

Posted Oct 13th 2009 9:30AM by Tom Johansmeyer
Filed under: Bad News, Economic Data, Recession

It's going to get worse before it gets better, according to Stone & McCarthy Research. Early 2010 has "the more troublesome outlook," as the economy will have to walk on its own, the research firm says. This year, it's had a pair of crutches: tax credits for first-time home buyers and the cash-for-clunkers program. So, if the stimulus hasn't taken hold by the end of the year, the first quarter could be a bruiser.

The firm adds that "continued growth in aggregate demand" is needed, bringing the discussion back to consumer spending . . . which is where it will always land. We're likely to see the 3.2% growth rate from July through September drop to 2.4% at the end of the year because the crutches will have been gone. And, let's not forget that unemployment is expected to break the 10% level next year.

Holiday sales, long the back-of-the-napkin number on the state of the U.S. economy, are likely to fall 1% from last year, according to the National Retail Federation. But, this is a step forward. Last year, we saw a 3.4% decline – the first decline since the NRF started keeping score in 1995.

Perseverance seems to be the order of the day through the beginning of next year. Dig in, make it through March, and then start to look for that light at the end of the tunnel.

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