Comments: Robert Shrouds
Corporate Economist, DuPont Co.
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?
I expect an inventory led recovery with the mfg sector moving up , the old economy moving (like auto production ) up first, then a second leg up in the high tech sector:. Also the mfg sector should be aided by increased defense production.
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?
I think the recovery will be volume driven, profits will have a tough time recovering because pricing will remain weak for some time. A global recession has created excess capacity and it will take time to balance demand / supply conditions. Also the strong dollar will contribute to pricing and profit weakness.
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?
Consumers will play more of a supporting role rather than a driving force. The inventory cycle will the major driver in the first half of 2002. Housing not much room to grow but remains at relatively good levels
Copyright 2001, Bloomberg L.P.
