Goldman Sachs Sees Recession In 2008
 

I hope everyone takes a little time (no, make that a lot of time) to ensure your finances are in order and that you can weather this recession. I don't think it will last very long, but it could be painful once we are mired into it.

From Reuters:

NEW YORK - Goldman Sachs on Wednesday said it expects the U.S. economy to drop into recession this year, prompting the Federal Reserve to slash benchmark lending rates to 2.5 percent by the third quarter.

In a note to clients, Goldman said real gross domestic product would contract by 1 percent on an annualized basis in both the second and third quarters. For all of 2008, the investment bank said GDP would rise by 0.8 percent.

The unemployment rate will rise to 6.5 percent in 2009 from the current 5 percent, it said.

The weakening economy will force the Fed to lower policy rates by an additional 1.75 percentage points from the current 4.25 percent. Starting in September, the Fed cut rates at the last three meetings of the Federal Open Market Committee, reducing the target rate on loans between banks by 1 percentage point from 5.25 percent.

Goldman strongly advises fund managers to overweight health care, consumer staples, energy and utilities. They are significantly underweight consumer discretionary, financials, industrials, materials and information technology.

The three most significant changes to their sector recommendations are the reduction in the financial sector weighting by 300 basis points to 14 percent, the information technology weighting by 400 basis points to 15 percent, and the increase in their health care weighting by 300 basis points to 17 percent, the firm said.

Their reduced allocation to financials reflects weak fundamentals and their declining weight in the S&P 500. The reduction in information technology reflects that the group has been the second-worst performing sector in both the six months leading up to a recession and during the first phase of a recession, Goldman said.

The health care weighting change reflects strong performance of the group during the six months leading up to and during the first phase of a recession in addition to an attractive valuation, Goldman said.

On Monday, Merrill Lynch economist David Rosenberg said the jump in U.S. unemployment in December confirmed that the economy was entering a recession.

I think it's being over played by the media, I think the economy will just shift to a more export orientated stance over the next few years and reverse the current account deficit thats accumulated

Low interest rate, higher unemployment and a weak USD all point to increased exports and lower imports than previous years

What kool-aid have you been drinking? There is a fire-sale going on in the US right now. Good 'ole US of A is no longer the front runner of manufacturing and emerging economies and markets. It has ALL shifted overseas.

This country had better wake up and smell the coffee...it is time to become "a healthy and well nourished educated labor force...which leads to sustainable economic growth." This country needs to develop ALL of it's human & intellectual capital and stop all the bull####.


atp

Depends who you listen to really

http://edition.cnn.com/video/#/video...s.harrison.cnn

Our money needs to start staying in the US. I for one, search high and low to purchase goods made in the U.S. Even the Eco stimulus package DC. is pushing for, like it's the saving grace, is worthless. Think about it. You give a person $300-800, they buy a product. A good percentage goes to the retail store and a small percentage to the cargo handlers, but the real profit goes to China or India (real profit is taking raw materiel and making the value increase through manufacturing). Thus, any eco stim package will temporarily produce a rise, but the long term benefits go outside this country. WE ALL NEED TO WAKE UP!!!

As for who you listen to? Think for yourself! Gather information and test it against facts you know. So let’s think about the US, 6 Tril in debt, 900B in deficits (which is the short-fall each year, 7% of GDP), wars being financed in both Afghanistan and Iraq and discussions on Iran and Pakistan. To add injury, congress throws 150B in tax gifts. There is no fiscal policy...only politics.

Check out this link for coffee added to our cool aid. As long as our federal budget remaina a game of Su DokU...?

http://www.iie.com/publications/pape...ResearchID=705

I think the worst part of it is everybody and their mother saying we are going to have a recession. However, everyone should do what they can to get out and stay out of debt.

The "worst part" is not "everybody" speculating on recession! The "worst part" is individual, and governmental debt.

Pop quiz...

Is the national debt as a percentage of GDP currently increasing or decreasing?

recession???
 

I have a very difficult time believing were headed for a recession. Many commodities are near all time highs and outside of the housing and financial sectors, the economy is a hot box. The fourth quarter U.S. durable goods order, which was released this morning, was far better than expected. The weak dollar is favorable for U.S. businesses. The fed has shown that it is willing to be aggressive to thwart any major economic stalls. While things may be softening a bit, I don't think we're anywhere close to the r word.