If history proves anything is the consensus is usually wrong. Especially when it comes to economists.
Remember all those geniuses who were bullish in late 2007?
Now these same wise men are proclaiming a slow/no-growth “L-Shaped” recovery…
The ONE THING nobody expects right now is a “V-Shaped Economic Recovery”….
Which means that it’s extremely likely to be happen.
Just like the Nouriel Roubini Stock Market Bottom in March, which turned on a dime, and when vertical takeoff.
The consensus is just too pessimistic. Which means that a continuous flow of less-worse, or better than expected news, will be a major surprise, boosting the animal spirits and confidence. The only thing the economy is missing is confidence.
What could be the catalyst for the new optimism? Perhaps the Great Speechmaker of Pennsylvania Avenue.
If Obama starts applying his charisma, and oratory skills to actually promoting the “American Way” (aka Capitalism) a la Reagan’s “Shining City on A Hill Speech” we might see surprising results.
Here’s some food for thought from our younger sibling, WSJ:
James Paulsen of Wells Capital Management also has made the argument that panic has made forecasters overly pessimistic. “The complete collapse of economic activity can only be explained by healthy consumers and businesses which were ‘frozen with fears’ about the second coming of the Great Depression and simply stopped all economic behaviors for a time. Once the depression scenario was widely dismissed, healthy players regained some confidence and began spending and hiring again,” he wrote in a research note earlier this month. “As fears recede further, healthy players will contribute even more to the recovery.”
He says that multiple factors could contribute to a stronger than expected recovery. Among them are the massive stimulus in the pipeline, a smaller burn rate from housing and autos and a rising savings rate being partially offset by improving net exports.
And there’s also Michael Darda, chief economist at MKM Partners, who says the intense narrowing in high-yield debt spreads of late points to a 4% growth rate in GDP next year — twice the consensus forecast. “Consensus forecasts, which were far too optimistic a year ago at this time, are now likely far too pessimistic about year-ahead prospects,” he said in a research note today.
