CHRISTOPHER THORNBERG: DOUBLE DIP IS COMING IN 2011
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Contributed by The Pragmatic Capitalist (Reporter)
Thursday, March 11, 2010 12:05
More stories from this contributorThis story has been viewed 3 times In a recent presentation in Orlando, Christopher Thornberg noted the likelihood of a double dip in 2011. Thornberg famously predicted the real estate bubble, disastrous downturn in California and the high probability of recession in 2008. He is a former economist at UCLA and currently works at Beacon Economics, the firm he founded. I relied heavily on Thornberg’s analysis in helping to side-step the housing debacle and I have found his research to be not only straight forward, but well reasoned.
Thornberg says the economic recovery is mostly government induced and could lead to a double dip as the government steps aside and attempts to hand over the baton to the private sector. In the presentation Thornberg noted the continuing concerns:
The bad news: we haven’t completely fixed the problems, instead the economy is being driven by government policy
The worse news: government policy is causing its own set of problems: namely public debt and the potential for inflation
Thornberg says 2010 is likely to be a good year for the economy, but as the stimulus wears off the true colors of the private sector will shine through and result in a double dip. On the bright side, Thornberg notes that export growth is likely to remain strong and businesses are well positioned. Unfortunately, in the long-run, he says the following 7 negatives are likely to outweigh the few positives:
Consumer weakness will likely continue
Businesses are a wild card
Housing bounce won’t last
Banks not out of the woods yet
Commercial trouble to continue
Significant chance of a double dip
Higher Rates coming down the pike
