Out With the Old; In With the New (Year)!

Image courtesy of the Wall Street Journal

Some glimmers of hope are starting to emerge on the horizon and some economists are starting to shed their doom and gloom facades and actually smile.  Alan Murray, who writes for the Wall Street Journal, is cautiously optimistic about the upcoming year and he shared his thoughts recently in a piece posted on-line.  He sees five things happening in 2009:

1. This will be a good year to invest in stocks.  His rationale?  He thinks that we’re at, or close to, the bottom of the market and the age-old adage applies - ”Buy low, sell high.”  It will be tough for most people to take this advice because they have been burned in the market over this past year but if you can get over your investing jitters, opportunity awaits.
2. It will be a good year to invest in real estate.  He points out that buyers who are entering the market at this time are finding historically low interest rates and an inventory of homes that is second to none.  He feels sellers will start becoming more realistic with their pricing which will lead to good opportunities for those who can recognize it.
3. Americans will learn to live within their means.  This trend is happening before our eyes.  People no longer heat their homes to 70 degrees – it’s now 66 degrees.  A new car that adorned their driveway every three years is now turning into six years.  A pair of new jeans that used to be purchased at that trendy store in the mall are now being picked up at WalMart.  Multiply these scenarios by 300 million and you understand what effect it is having on the American economy.
4. President Obama will have a historic opportunity to reshape public policy.  Because of the economic crisis, the new President will have an opportunity to do things with the American economy that were unheard of in years past.  The stimulus package numbers that are being bantered about are mind-boggling and this money is going to be pumped into new roads, bridges, infrastructure, schools and just about anything else that moves.  A lot of companies and people will benefit because of this windfall.
5. Your (federal) taxes won’t rise.  He claims that even though Obama said during his campaign that taxes would be raised for those Americans in the upper tax brackets, no politician is willing to back this in the face of a serious recession.  Well if taxes aren’t increased, how is America going to pay for all this “stimulus?”  That seems to be the million (or should I say trillion) dollar question.

Time will tell if these predictions become a reality.