- Unemployment will stay above 9%. The economy is growing, but not at a rate fast enough to reduce the unemployment rate. The somewhat more reliable employment-to-population ratio will also remain about the same, at 58.5 +/- 0.5%.
- Housing prices will fall slowly. The various incentive programs put the brakes on the freefall in prices starting back in 2009Q2, but those have run out. The issues of shadow inventory and mortgage resets still have to be resolved.
- Fed Funds Rate will stay below 1%. Since the economy isn't growing very fast, the Fed will hold steady on this particular policy.
- The US dollar will go nowhere in particular. There is still enough uncertainty in the global economy (mainly due to the Eurozone's problems) that flight to quality plus the carry trade will balance the Fed's monetary expansion. I have no idea where any particular currency will go other than the yuan, which I'm confident will stay essentially unchanged.
- Oil will end the year at $110/bbl +/- $5. Global growth will continue to drive the price up.
- The Euro will survive. So far the Europeans have done a good job at kicking the can down the road, and I think that will continue for another 12 months. That doesn't mean a country won't leave, however.
- Cuba-US relations will improve radically. Obama will write off Florida because it's already un-winable for him in 2012, and instead fix this festering farce. Fidel won't die, but Franco will remain dead.
- Counterinsurgency will remain the US strategy in Afghanistan. The troop reductions will be minimal. The political class is in complete denial about the damage being done to the US (not to mention Afghanistan) by the current policy.
- The Republicans will blink on the debt limit. There's no way the people who own the Republican Party will allow the US to go into default. The some of the newly elected teabagger types don't know that yet, but they will soon. The outstanding question is how much Obama will concede before the Republicans back down. (added 2011/1/2)
Saturday, January 1, 2011
Predictions About the Future
My last foray into predicting was something of failure, but why not try again?