As part of a group writing project, I made a series of year end predictions about where the economy would be at the end of 2008. Here is the list of predictions I made and how they played out.
Who Will Win The Presidential Election?
My Answer: McCain
Ok, maybe this was a bit wishful thinking or delusion on my part. But, I think McCain could have won if he had handled the economic crisis better. McCain lost because he didn't understand the economy.
Not that Obama understands the economy any better, but McCain repeated the words of Bush, ‘The Fundamentals of our economy are sound’ – when they were not. Shortly after that the stock market dropped a few thousand points. Obama on the other hand acknowledged that the economy is in big trouble – as the global financial markets are facing the largest crisis since the great depression. I primarily supported McCain for moral reasons because morality proceeds economy.
That said, I see Obama already making several changes to this economic policies and I’m sure he will have to make many more changes that he didn’t intend to make when he was running for office. Sooner or later, the nation is going to have to face the recession, no matter who the president is. Our consumer based economy will crater as consumer confidence is now at an all-time low. Obama will be forced to forget about his planned agenda and spend most of his time dealing with economic issues.
How Will The Dow Fare?
My Answer: 8,500
Yesterday the Dow closed at 8,668 and I have to say that I got this one pretty dam close.
What About The Unemployment Rate?
My Answer: 6.5%
The actual unemployment rate jumped to 6.7% last month, which is not too far off my prediction. As it turns out, November was one of the worst months for job losses on record, with over 533,000 non-farm eliminated in that month alone.
Its official, the US is in a recession. The official declaration by the government that the US is in a recession, has given businesses reason to stop trying to hold to as many people as possible to be better prepared for the rebound.
Will The Bailout Package Be Effective?
My Answer: Yes, in keeping the banking industry from collapsing – No, in keeping the market from dropping.
I nailed this one pretty good. The banking industry has not collapses and the market continued to drop and there is now a line out the door with industry after industry wanting a bailout - just as I predicted.
What Will Happen To The Dollar?
My Answer: In the short term the dollar could do fairly well.
Again, I nailed this one as well. The dollar has improved and then dropped down to about where it was in October. But, as I have said many times in other articles, the long-term outlook for the dollar is down and the patience of the world is growing thin in continued support for the dollar.
In summary, 4 out of 5 is not that bad.