Zeev's Turnips Patch-No Politics (ZEEV)

[geezer]

Zeev, FWIW the Bank Credit Analyst seems to agree with your prediction:

http://www.profutures.com/print.php/179/

BCA believes that the US economy will recover to a 3-4% annual growth rate in GDP by the end of the year. BCA cites the Index of Leading Economic Indicators which has risen for the last four months, as well as other indicators. BCA believes the economy will continue to recover due to four primary factors:

1. Low rates & aggressive monetary policy;
2. Record deficit spending in Washington;
3. President Bush’s latest tax cuts; and
4. The falling US dollar.

BCA believes these factors, and others, will ensure that the economy recovers for at least the next 12-18 months.

However:

BCA believes that because of the massive effort being made to reflate the economy now, the Fed and policymakers in Washington will have little ammunition to pull us out of the next recession. They say:

“The dark side of current reflationary efforts is that they are leading to increased financial imbalances that will cause problems down the road. Consumers are taking on more leverage, government finances are deteriorating dramatically and the bloated current account deficit is continuing to increase. None of these trends are sustainable over the long term.
There have been recurring but misplaced concerns about excessive consumer debt throughout most of the post-WWII period. Nonetheless, this does not mean that debt can outpace income growth indefinitely. Currently, consumer balance sheets are in reasonable shape but that may not be the case in the next economic downturn, especially if housing takes a hit.
There has been a fairly regular four to five-year business cycle in the U.S. in recent decades. This suggests that the next economic downturn could occur in 2005 or 2006. The problem is that the authorities may have limited ammunition in their policy arsenal with which to try and rekindle growth.
Fiscal options will be limited given current trends in the deficit, the dollar will have already fallen significantly, and interest rates may still be below equilibrium levels. Thus, the threat of a debt deflation will be even greater in the next recession than it is today.
With limited policy levers at their disposal, there will be tremendous pressure to try and devalue debt burdens via increased inflation. That, of course, would create even more instability in the dollar and could trigger turmoil in the bond and stock markets.
Whether the 50-year supercycle of debt and illiquidity will come to a traumatic end in the next recession remains to be seen. It is always possible that the economy will continue to benefit from positive supply-side developments, allowing it to sustain rising financial imbalances for several more years. However, the U.S. cannot postpone its financial adjustments indefinitely.”

Thanks to Les on the S.I. "links" thread.