Some good news from Wells Fargo, where their chief economist, Dr. Scott Anderson, predicts an economic turnaround in the second half of 2009. The impact of a staggering $2 Trillion in economic stimulus actions by the government will finally take hold, and Dr. Anderson predicts the 3rd quarter of next year will be better than expected. Anderson predicts that the housing sector will lead the way. “One bright note is that the sector that led the economy into this morass is about to turn the corner, perhaps as soon as this summer, and will start to lead us out,” Anderson said. Dr. Jim Paulsen, chief investment strategist of Wells Capital Management adds “It’s like you’re at a cookout and you’re trying and trying to get your charcoal going and you keep squirting on lighter fluid and all of a sudden it goes ‘poof!’” (courtesy of Yahoo News)
This is certainly welcome news for a very battered economy, both locally and nationally. Indeed, we are starting to hear more talk of a recovery in 2009, and with a new administration taking over in January, expect that thinking to gain momentum, especially since it appears all but certain that Obama’s first priority will be to pass another huge economic stimulus package as soon as possible. With the Fed lowering rates to historically low levels, along with government stimulus packages, it seems likely that things should begin to improve next year.
In the housing sector, while we have seen sharp drops in the Median home prices both statewide and nationally, sales activity is up, especially in the hardest hit areas of the central valley. Yes prices are down, but buyers are taking advantage of the bargains that are available, and that is a good start. And refinance applications are up sharply as well, thanks to the Fed. And the stock market seems to have found a stabilization point after a year of devastating losses.
But unemployment will continue to rise until we start to see a recovery, and corporate earnings and retail sales numbers will be brutal in January, so there is still some pain ahead early in the year. But it certainly appears that better days are ahead later next year. So as long as we are uncorking the champagne on New Year’s Eve, we will have one more reason to toast the arrival of 2009.