US ECONOMIC GROWTH 2005 06

1
US ECONOMIC GROWTH2005 - 06

• Prof. Ross M. Starr
• UCSD

2
(No Transcript)
3
(No Transcript)
4
(No Transcript)
5
(No Transcript)
6
(No Transcript)
7
US Construction Spending
8
What we dont need to worry about

• Bernanke Fed
• Flat or inverted yield curve

9
2006 Forecast

• GDP growth 3.6 Q1 declining to 3.1 Q4
• Core CPI 2
• Fed Funds 4.5 - 4.75
• 10 yr. Tnote 4.5 -5
• Unemployment rate 4.6 - 5
• Basis slowing in construction spending 2nd
  half, slowing in consumer spending with slowing
  growth of real estate value

10
What can go wrong?

• Oil price spike
• Exchange rate crisis raises US interest rates
• Collapse of housing bubble causes debt-deflation
  spiral

11
What can go right?

• Soft landing in real estate
• Steady to declining oil prices
• Expanding business investment