Though ambiguity still rules the economic future, a consensus is forming that recovery will be a long, slow process. Experts from academia to governments are doing their best to clear the fog in their crystal balls but few hard and fast answers can be found.
That said, there are some interesting insights appearing. In a recent interview with Knowledge@Wharton, Jeremy Siegel, a finance professor at Wharton, noted that demand in several sectors is starting to show signs of increasing.
But don’t expect a huge jump in the near future, Siegel advises. Industries like housing and automotive have been battered. So even though we’ve likely hit the bottom – Siegel expects May, June or July to be declared the official bottom – we still have a long way to climb before we can say things are good again. (Read the interview with Siegel here.).
At the same time, the International Monetary Fund is showing a little more optimism about recovery now than it did in April. In its latest World Economic Outlook, the IMF forecast the global economy to grow 2.5% in 2010, up from its earlier prediction of 1.9%.
The only thing certain about the economy at the moment is the uncertainty we have about what recovery will look like, an issue that Pembroke Consulting’s Adam Fein addressed in a recent blog.
While he agrees the most likely scenario is for a "U-shaped" recovery, he’s also seeing some potentially troubling signs, as well. He says: "I believe there is a credible scenario developing for unexpectedly rapid growth in 2010/2011 – a ‘V-shaped’ recovery that could sow the seeds for much bigger problems because this scenario carries a significant chance of inflation."
As such, the worst may be over, but that doesn’t mean that things are settling down. We may still hit speed bumps, but most analysts seem to agree the economy is beginning its upward trend."