Zeev...
My take is that we do not get a year end bump and the downturn seen in the second half of the last quarter will continue for some time to come. I look for the Q3 GDP just reported to be revised downward, and the Q4 GDP to come in around 1% or less with a 50/50 shot of the final number being negative. That trend should carry forward well into next year as the consumer continues to weaken and the first victim (and hardest hit) will probably be auto sales, where 0% financing has robbed future sales to maintain current production. The resulting slump in auto sales will hit the bottom line of the auto producers hard, and will be felt throughout the economy.
I continue to question the stimulative effects on the economy of that portion of the rise in the national debt which is attributable to a shortfall in revenues as opposed to a rise in spending. I also feel that some increases in spending have little stimulative effect on our economy, such as military spending overseas (for new and expanded bases, military assistance, etc.) and increased foreign economic assistance such as IMF bailouts in Argentina and Brazil (not to mention PPT "investments"). Finally, M1 has been contracting, rather than expanding, and with energy costs having risen along with state and local taxes (to offset sharply reduced revenue receipts), the total picture is not one to induce expansion, in my opinion.
I fully expect layoffs to mount as the consumer continues to pull in his horns and the overall economy continues to slow down. The downside of globalization will hit internationally and the US slowdown will produce a global recession that will be hard to come out of with Japan and South America in danger of severe economic crises and Europe and the US facing a potentially severe recession. Hopefully it will not come to that, but the potential is certainly there.
Just my opinion, though.
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