Predicting is dangerous business, particularly now. We have been through so much economically that we have actually changed emotionally and psychologically. This change will have a big impact on the economy. Consumers have become cautious and are actually saving more and spending less. These folks make up two thirds of the total economy and that will pretty well ensure slow growth for the U.S.economy in the coming year. With unemployment at 10.2%, the highest level in over twenty five years, there will be a drag on economic activity until we get folks back to work.

Corporations are acting like consumers. They are hoarding cash and not adding to the employment rolls. Over 500 of the largest non-financial companies in the United States are hlding nearly a trillion dollars in cash and short term investments. This is the highest level in over fifty years. Again, this ensures slow progress.

The government will be spending approximately $100 billion each quarter to prop up the economy. Clearly, this will be a positive stimulator, but not enough to outweigh the cautious consumer and corporations.  Another good sign is the decline in the value of the dollar will help exports. India, China and Braz il have all done relatively well in recent years, and they are anxious to buy anerican goods at bargain prices.

The possibilitiesof inflation and tax increases to pay for the tremendous government debt are real, and will contribute to the generally cautious mood.  Let’s see if there are some reasons for optimism. One is that companies will be investing in technology. This is less expensive than hiring large numbers of employees. Health care and equipment will see increases, again driven by spending on technology. Quite likely, government will become a growth industry, as more bureaucracy are formed in response to health care legislation.

As developing countries grow, the market for commodities will also grow. Some, like gold, represent a store of value. Others, like iron ore and copper are needed for economic growth. Consumer spending will likely improve in the cost conscious areas of fast food, low cost retailers  and home entertainment.

Traditional wisdom says that recoveries from deep recessions are generally robust. From all indications, this will not be the case in 2010. We wish all of you success and most impoirtantly, good health