Experts: Better days ahead
A group of financial wizards looked into their crystal balls Tuesday and saw some good news.
The recession will ease by the end of this year and companies will begin adding workers, signaling the end of the worst economic downturn since the Great Depression.
Chicago-based Dow Jones indexes assembled a group of financial experts to assess the impact of government actions, whether they will work to stem the recession and what opportunities that might present investors.
The recession has affected every region of the country and nearly every sector of the economy, said Gus Faucher, director of macroeconomics at Moody’s Economy.com, which conducts independent research and provides economic forecasts.
"It’s really unprecedented in the U.S. to have nearly the entire country in a recession simultaneously," he said.
The good news is there’s an end in sight.
The economy will pull out of the recession at the end of this year, marking a duration of 24 months, about twice as long as the average post-World War II recession, Faucher said. He said we are at or near a stock-market bottom, and stock prices should soon stabilize.
Home sales will turn around by midyear and home prices will begin recovering by the end of this year after bottoming out at 35 percent of their value from peak to trough. Home prices won’t return to their values of a few years ago during the boom, but will recover from current lows, he said paydayloans.
Banks probably will begin seeing improvement in capital as the government program to remove bad assets kicks in and the Federal Reserve provides more economic support. Faucher predicted major bank and financial services company failures will abate in the second half of this year and credit will begin to move again.
The stimulus package will spend $50 billion on roads, bridges, utilities and other infrastructure, said Craig Noble, portfolio manager, for Brookfield Redding LLC, a Chicago-based investment manager of global real estate and infrastructure securities.
He sees a potential sweet spot for investors in companies that own the assets that will benefit from the needed spending. He said the stimulus package is only a small portion of government spending on transportation and utilities. Congress must reauthorize this year a multiyear transportation bill that provides hundreds of billions of dollars in spending and sets priorities for the next five years or more.
"The infrastructure class currently offers a unique and compelling investment case with trillions needed to be spend across the globe in coming years," he said.
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