Economic Forecast for 2009

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It's a new year, and many Americans are glad to put last year's bad economic news behind them.

Stock markets plunged well over 30 percent in 2008 in the worst decline since the Great Depression. But some analysts say the rocky ride is far from over.

Dreary Times Ahead?

Many forecasters predict 2009 will be one dark, gloomy year.

In fact, for the first time since statistics have been kept, global economic growth will actually halt.

Even amidst all the chaos last year, global growth still went up about 2 percent in 2008. It'll probably go down almost half a percent this year.

And the largest economies - America's, Western Europe's and Japan's - will likely see a decline of about 1.5 percent.

"We're looking at rising unemployment. We're looking at probably another couple of quarters of really tough G.D.P. losses, and they're going to be tough times. We're looking at falling home prices still. So all of the problems that we saw in '08 are likely to continue through '09," said Phil Kerpen, the policy director of Americans for Prosperity.

But not everyone agrees. Some forecasters think the economy will begin to turn around mid-year ".and rebound as we move into the second half of '09 and hopefully take the rest of the world with it," said Alec Young, an equities analyst with Standard and Poor's.

These forecasters believe all that stimulus the Obama administration plans to heave at the economy has to make things better.

But conservatives like Kerpen warn radical government action might actually make things worse and could cause the recession to turn into a depression that lasts five years or more.

"There's a lot of sentiment out there for repeating a lot of the mistakes that were made in the 1930s: of becoming protectionist on trade, of raising taxes, of trying to reorganize the American economy through central control and regulation," Kerpen said. "And I think if we repeat those major errors that were made in the 1930s, then this could be a lot longer and a lot worse than even it looks right now."

Are There Any Silver Linings?

Well, this panic may have shocked many Americans into starting to save money again after years of living in dangerous amounts of debt.

And if you are still spending, "there are going to be opportunities out there to get very good deals on items if you are fortunate enough to still be working," Kerpen said.

Prices will continue to fall on just about everything - great news if you can afford a house or car, for instance. And if oil prices keep plunging, you may soon be filling up that car's tank for less than a dollar a gallon.

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CBN News
Paul Strand

Paul Strand

CBN News Washington Sr. Correspondent

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