A dull as dishwater blog...but stuff you should be thinking about.

Studies show American investors, companies and individuals are hoarding trillions of dollars in cash.     They're all sitting on a mountain of greenbacks waiting to see where the economy will settle out.   The best guess of insiders is that the US recession will end in late 2009....however that doesn't mean our troubles are over.   Look for national growth only in the 1 - 2% percent range for the next couple of years.

Our entire economy is built on consumer confidence.  Unless banks lend and consumers spend we're dead in the water.   At this point fearful consumers would prefer to retain cash and pay down debts than shop 'til they drop.  

Cash hoarding is not unique to the US.    Everywhere people are stockpiling cash....every place that is except China.  China's economy has been hit hard by declining exports, but that hasn't stopped middle class domestic consumerism.    The government there (like here) has been spending record amounts of yuan to stimulate the Chinese economy......and it seems to be having an affect.

In the months ahead look for headlines of how middle class Chinese are leading the world out of recession.    China has a huge population of middle income earners who for the first time have the cash to become major consumers.    They're eagerly buying cars, television sets, electronics and other big ticket items for so long out of their reach.  

If there's one bright spot on the planet for early economic recovery it's China.    But, hold on a moment!!  As growing as China's domestic economy seems to be, recovery still requires a renewed volume of global exports particularly to the G-3.  (The United States, European Union and Japan.)   With these economies still in trouble, the picture is still anything but rosy.

Who leads the way out of recession matters little to me, as long as we get there in the shortest possible time.   China is not only a large export economy.....it's also a vast import economy hungry for what America has to sell.

To me it looks like the US is more or less on track for a turn around by late 2009.  The European Union and Japan, the other big players will likely see their economies delayed until early to mid 2010.

Once the corner has been turned...look for inflation to rear its ugly head.

Those are my predictions......   How do you see it?   Your thoughtful comments appreciated.

Thanks.  Sincerely, David