Thanks to the weak dollar, U.S. exports
set new records in each of the past
seven months.
Election years tend to be strong as
politicians stimulate the economy, but
this is not likely in 2008, due to gridlock
in Washington.
Financial experts are
forecasting tax increases after President
Bush departs. The FED normally fights
economic downturns, but today it must
also defend the dollar. Consumers are
overextended because they cannot
finance purchases with increasing
home values.
As falling home values undermine
consumer confidence, banks will
restrict lending, causing mortgage
holders to brace for more defaults.
As the U.S. consumer pulls back,
exports to the U.S. will falter, slowing
international growth. A recession is
highly likely and it could be extended.
Positives
Negatives
Weak dollar makes U.S. products a bargain
Housing debacle will overhang for years
Export sales increasing
Banks loaded with faulty credit
U.S. is technology leader
Corporate profits falling
Election years tend to be strong
Small budget deficit
FED fighting currency shrinkage a. Short rates too high b. Money growth constrained
