I predict that at some point during the next two quarters, we will see some signs of positive GDP growth. The pundits and politicians will indeed declare that President Obama is the greatest president of all time. This will happen even though the President's policies and stimulus spending will not actually kick in for several more quarters. The pundits and most Americans for that matter don't fully understand economics and the capital markets, and those signs of life will only represent the calm before the storm. We will see inflation surge at an unprecedented rate and it will suffocate any growth that we may see this year. Just today, the White House announced that the projected deficits will be larger than initially expected despite their rosier assumptions.
From the McClatchy Newspapers:
The White House on Monday projected 2009 and 2010 federal budget deficits far higher than it forecast just two and a half months ago, even as it continued to defy most experts and predict that the economy is headed for a strong comeback starting late this year.
Economists scoffed at the latest administration predictions.
"If they keep playing this game, they're going to have real credibility problems," predicted Brian Bethune, the chief U.S. financial economist at IHS Global Insight, an economic research firm.
The new administration budget said that the fiscal 2009 deficit would reach $1.84 trillion, or $89 billion more than forecast in February, while the 2010 figure now is estimated at $1.26 trillion, or $87 billion above the previous number. The fiscal 2008 deficit was $459 billion.
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