FBR Capital Markets out with a note saying:
"US Consumer Spending is poised to make a short term recovery later this year, despite continuing job losses, while long-term consumer spending prospects remain weak. The firm thinks the coming cycle of inventory restocking will prompt businesses to start hiring again, making unemployment peak around 10.3% in 4Q. However, FBR's longer-term outlook is bleak, firm says the economy has been reliant on consumer growth that's not likely to return for sometime and sees unemployment above 8% through 2011. Firm says American Express, BofA, Capital One, and Americredit, would benefit most from stabilization in unemployment, but would continue to suffer if the 10.3% peak last a long time."
I will say only this.
2/3 of GDP is consumer spending, most of that spending is via credit. Credit is being zapped out of the economy aggressively by credit originators like BOFA and Capital One. Unless employment comes down below 8% trend line going forward, credit will not come back on line.
No Credit Creation = No Consumer Recovery - Period!
Even if credit comes back on line, consumers will be gun shy to go back to the well once again.
This was a scary credit correction. Repeat! Scary credit correction, I generally believe that people are in debt reduction/savings mode for the next 10-15 years, thus our economy will suffer.
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