Investing Blog

Finance Blogs » Investing » 2011 looking rosy

2011 looking rosy

By Sheyna Steiner · Bankrate.com
Wednesday, December 15, 2010
Posted: 8 am ET

The end of the year is the time when every publication likes to roll out their predictions for next year. Don't worry, Bankrate's 2011 outlook story is on the way.

A survey of 55 economists by the Wall Street Journal has found that most are optimistic about  economic growth in the U.S. next year. The survey was released on Monday.

In "Economists predict growth in 2011," writer Phil Izzo reports that the economists predict accelerating growth throughout the year with a rise in gross domestic product of 3 percent.

The economists surveyed were not alone in casting 2011 as a year of booming business.

On Monday, Bloomberg.com also reported some exciting news for investors. A Bloomberg News survey of 11 strategists predicts that the Standard & Poor's 500 index will gain 11 percent next year, according to the story, "No new normal as strategists predict 11 (percent) S&P 500 gain."

Unfortunately, the predicted good times can't last forever, at least according to Peter Brimelow as he writes for Marketwatch.com. In "Huge stock decline -- but not yet," Brimelow reports on the Aden Forecast.

The Aden Forecast is an analytical newsletter compiled by sisters Pamela and Mary Anne Aden for the past 29 years. In agreement with the strategists surveyed by Bloomberg News, the Aden sisters believe that the near term holds good things for the stock market.

Unfortunately, the very long-term trends are bad -- catastrophic even, according to the Adens. The entire past decade could be only a precursor to an apocalyptic decline.

At least next year looks good.

What are your predictions for the year?

Get more CD and Investing News with our free weekly newsletter.

Follow me on Twitter

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
1 Comment
Ryan
December 16, 2010 at 10:02 am

I tend to agree that things are only good "short-term". America is in the fight of its life right now with some pretty tough problems to deal with.

1. Debt - America has financed the last 30 years of growth with large volumes of public debt. Those bills are starting to catch up, and any additions to that debt are making the possibility of paying off that debt more and more unlikely.

2. Stimulus will wear off in 2011. The measures took to fund projects using the government's stimulus spending on infrastructure is set to run out near the end of 2011. This will make it difficult for growth in construction, which is already struggling.

3. Interest rates are headed higher. Our mortgage market can only offset this bad news if jobs come back quickly. I don't see that happening without long-term tax measures to promote growth. Also, that means interest rates on government debt will squeeze the already blown budget even tighter.

4. Inflation could hit hard if government has overstimulated this economy.

5. Spending will have to be cut. The economy will suffer for this.

In the best scenario, I believe this economy will continue to limp along and have a mild recession late 2013ish.

The worst case scenario, Europe goes bankrupt, and that fear spreads here where we have the most debt of any nation, and we eventually go bankrupt. Having a diversified currency portfolio is key, and try to get Asian currency; grab some yuan if you can.
Our currency is heading for the doldrums.