How do you expect the coming recovery to shape up, especially in terms of its strength and the sectors that will lead and lag behind? How have you factored in the uncertainties surrounding terrorist activity and the war?
Net net modest recovery, consumption growth moderate,little pentup demand. Investment modest after bubble mania, inventory snapback big plus, but temporary.Government strong, the floodgates are open. Net exports a drag while US leads global recovery.
The profits outlook is a crucial element in the recovery. What is your outlook for profits, and what factors will shape the profits recovery? Do your profit expectations square with those of investors?
Modest profits recovery: days of accounting hype are over. No more tricks like pension gains,stock options, and high-tech stock holdings to pad gains. Not to mention non-recurring items that recur. Implies long consolidation before indices see new highs(several years). Single-digit profit growth more in line with economic growth.
Consumers will likely play a major role in the strength of the recovery. In the face of low savings, heavy debts, and sharply reduced wealth, how much can we expect households to contribute economic growth next year? And can we expect any contribution from housing?
Consumer spending growth in the 2.5-3.0 percent range.Bubble mania 5.0-percent pace is gone forever. Still high ratio of wealth to income supports consumer sector. Housing level strong, but neutral growth factor.
Copyright 2001, Bloomberg L.P.
