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'Unrelentingly Bad': Even the Optimists See Hard Economic Road Ahead

Posted Jan 12, 2009 07:45am EST by Aaron Task
Related: ^dji, ^gspc, ^ixic, SPY, DIA, QQQQ, TLT
"It's almost like the economy hit a wall in September and then fell off a cliff," Nariman Behravesh, chief economist at IHS Global Insight, said in the wake of Friday's grim jobs report. "The news is going to be unrelentingly bad for the next four to five months."

At the risk of piling on, the economist and author of Spin-Free Economics, believes real GDP shrank by 6% to 7% in the fourth quarter and we'll see "a very similar number" in the current quarter.

The irony is Behravesh is somewhat optimistic about the economic outlook, at least relative to many other prognosticators. He predicts the following:

  • The recession will bottom sometime in the summer of 2009.
  • The unemployment will peak at 9.5% in late 2009-early 2010.
  • The risks of a Great Depression 2.0 are "pretty low."

Still, Behravesh's less-than-awful outlook is based on the assumption there will be passage of a major fiscal stimulus package in the first quarter, as we'll detail in part two of our conversation.

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