Hedge funds and central banks around the world are on the gold-bandwagon - retail investors are still thinking about it.
7. The U.S. Economy and its Consumer Engine will Hit Rock Bottom
The personal saving rate will rise to four percent and both layaway programs and Christmas savings clubs will grow in popularity. This won't be good for the U.S. economy which will contract during the first two quarters and post anemic growth rates in the last two.
Much of the Christmas savings money will be raided late in the year as many consumers will think they've served their penance and, with money gushing out of the government and central bank, they will regain their spendthrift ways before year-end making for a spectacular Christmas shopping season as compared to the one that just concluded.
The personal savings rate hit 6.9 percent in last week's report for May, however, that was heavily influenced by the government handing out money, but the trend is definitely up. It's still too early to assess the rise in lay-away plans for this Christmas.
Negative growth in the second quarter is likely and, after such a terrible prior three quarters, the second half might produce some small GDP numbers without a minus sign in front of them. There will be lots of interesting year-over-year comparisons coming up this fall.
8. Reported Inflation will Dip into Negative Territory
We'll hear lots of talk about deflation as the overall Consumer Price Index dips into negative territory on a year-over-year basis by mid-year. At this point, we'll all be bathing in a virtual government money shower as policymakers desperately try to avoid the ignominious honor of being the first group to ever cause real deflation within a fiat money system (no, what Japan had was not real, hard-money style deflation - that was just baby-deflation).
The policymakers will succeed.
By the time the leaves start falling, we'll all be talking about inflation again as energy prices rise in what will look like an inverse, smaller magnitude version of what happened last year.
The Consumer Price Index showed prices falling at an annual rate of 1.3 percent last month and there's been lots of talk about deflation all through the first half of the year.
Unless we relapse into a late-2008 style crisis mode again later this year, in-flation will once again become a hot topic and you'll (thankfully) hear less and less about de-flation. Remember that, by the end of the year, we'll be comparing energy costs to the $35 oil and $1.50 gasoline from last December.
9. Four Million Jobs will be Lost
Nonfarm payrolls will decline by three million in 2009 and there will be downward revisions of about one million to prior years' payrolls data as the Labor Department grapples with its birth-death modeling once again, publicly confessing that it has utterly failed to provide any meaningful statistics about the labor market in real time.
Health care will be the only employment sector that adds jobs in 2009.
Teenagers all across the country will become disillusioned after having lived their formative years during the biggest financial bubble in the history of Mankind and then seeing it come to an abrupt end as home equity withdrawals are relegated to the history books. They will actually go out and seek work, though few will find any this year.
Almost three million jobs have been lost through the first five months of the year, so a total of four million by year-end may underestimate the net decline in payrolls and, yes, health care continues to be about the only sector that consistently creates jobs.
Teenagers are looking for work more these days, unfortunately, they're now competing with grownups, more than a few forty-something lifeguards expected to be applying sunscreen to their nose and twirling a whistle this summer.
10. Websites will not Wise-Up
A growing number of websites will continue to annoy readers by automatically playing video clips when the page is opened (didn't we already go through this process about four years ago?). They'll believe their marketing staff that this really is an effective advertising technique, but they will fail to understand just how many readers are leaving, never to return, after having to search so many times for that damn Pause button.
There's been some progress on this, but not nearly enough.
Overall, things are proceeding pretty much as envisioned six months ago, however, last year's predictions were spot-on up until about two weeks into the third quarter.
