No Recession; Stimulus Checks = Sugar Rush

...cavities to follow...

Reuters summarizes a UCLA Anderson Forecast report on the U.S. economy this morning. The highlights:

• What recession? The economy will keep growing, though not fast enough to please the people who make their money by playing with money. Expect a "subprime growth path" of 1.2% annually through 2009.
• Stimulus package = Snickers bar... or maybe Red Bull. Sure, it makes you feel peppy for a bit, but expect to crash later. The UCLA Anderson Forecast sees a similar effect coming from the stimulus package:

  To be sure the $108 billion in tax rebates will certainly help in the third quarter, but in our view it will be analogous to a one quarter 'sugar rush' for the economy.... In fact the combined effect of the waning effects of the tax rebates and the end of the investment incentives associated with the government's stimulus package in December, could very well lead to a decline in GDP in the first quarter of 2009" [quoted by Jim Christie, "Economic Outlook 'Subprime,' No Recession," Reuters via Yahoo, 2008.06.18].
  

  And don't forget, our kids still have to pay for our little stimulus splurge. How thoughtful of us.
  
• Interest rates: nowhere but up. The Fed won't risk making inflation any worse than it is. Besides, says the UCLA Anderson Forecast, rates now are lower than they were in 2003 and 2004, and "Most observers now believe that it was the very low real interest rates of that period that set the stage for the housing and credit bubbles that came later." Expect interest rates to hold steady this year and tick back up next year.