Great Recession Effects on GDP

  • Housing still bad, nearing bottom—still a drag for next year
  • Energy prices a drag—for next few years.
  • Effect of democratic movements in Middle East on oil and defense expenditures—unclear, but certainly a risk
  • Stimulus ending and QE2 ending—neutral for next year
  • Downsizing government, Tea Party goal—if greater than 10%, will take 5 years minimum to convert ending government activity to replacement free market enterprises. Does not address value of change, just lag in adjusting to it
    • Unemployment will likely increase due to deficit trimming
  • Result—GDP growth will be weak for next 3-5 years

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