Goldman’s Frowny Face

The most recent market analysis from Goldman Sach’s chief economist, Jan Hatzius, is a bit dour looking ahead at 2010. Hatzius predicts a continued recovery, but one that is very slow. Contrasted with Bernanke’s 3% to 3.5% GDP growth prediction for this year, Hatzius is estimating 1.5% GDP growth this year. He also believes the Fed is going to remain loose into 2011. His main concerns are:

  • A negative trend in continued savings by households
  • Weak labor income growth
  • Budget deficits weighing down state and local governments
  • The high supply of vacant homes
  • Unused industrial capacity
  • Limited access to credit

I would add the growing delinquency probably and expanding shadow inventory to the list of housing concerns. The fact that the Fed is going to have a hard time divesting its toxic laden balance sheet adds to his concerns about the Fed.

All and all I am starting to supremely depress myself with these negative outlooks on the economy. At least Spring Training has started.

(HT: The Pragmatic Capitalist)