Peter Orszag, Director of the Congressional Budget Office, gave a presentation today before the committee of the budget in the U.S. House of Representatives. The end result is that his presentation noted that the next Blue Chip survey will show further downward revisions to economic forecasts (on Nov. 1 it forecast 1.9% real GDP growth for 2008). He also covered housing & financial markets, oil markets, the current account and the dollar, consumption & confidence.
The good news is that the US Treasury hasn’t yet made lower official estimates, or if they have we haven’t gotten to compare the data to include our new financial forecasting for 2008. The FOMC did recently give its current outlook for 2008 and beyond and we covered that when it came it out.
The U.S. fiscal situation in reality may not be much different than a SIV or a CDO, but then again it is one of the highest rated debt instruments in the world and the US T-bill is still the "risk-free rate of return" for all financial models. Its AAA rating is still quite intact.
We’ve already heard state governors and city mayors noting how the housing situation will ultimately reduce property tax receipts. If the retail spending environment weakens much more, they’ll also have lower sales tax receipts.
When key companies indicate a larger chance of the economy affecting their forward numbers, Wall Street analysts usually cut their forward estimates for stocks in that sector and in related sectors.
Goldman Sachs recently increased its perceived chances of a recession as well.
Jon C. Ogg
December 5, 2007
Top Gaining Stocks
Top Losing Stocks