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July 7, 2009

Zions Bankcorp economist weighs in on the recovery

Jeff Thredgold currently serves as economic consultant to $50 billion Zions Bancorporation with banks in ten states and to numerous clients in a variety of industries.

He opines in his latest ‘Tea Leaf’ newsletter on Economics about:

  • Growth resuming in the U.S.EconomyA return to positive (if modest) U.S. economic growth during the July to September quarter is the consensus view of forecasting economists.

  • Budget deficitsThe Obama Administration’s aggressive spending initiatives will see a deficit approaching $2,000,000,000,000 in fiscal year 2009.The issue will be how to rein in estimated deficits averaging nearly $1 trillion annually during the following eight years. The President is likely to face more opposition to aggressive spending by more conservative members of his own party.

  • UnemploymentThe jobless rate could approach, or slightly exceed, 10.0% by early 2010.

U.S. Unemployment Rate

  • Inflation or Deflation?One influential camp of economists sees major inflation pressures after 2010 resulting from aggressive monetary policy and massive budget deficits. The other vocal camp sees a Japanese-style deflation unfolding in coming years, tied to weak residential and commercial real estate values, major slack in labor markets, and global recession.  Pick your poison.

  • The Federal Reserve The Fed’s “exit policy” from ‘quantitative easings’ is drawing greater scrutiny.

  • Long-term interest ratesWhether the Fed will boost its purchases of U.S. Treasury notes and mortgage-backed securities or do something else creative in an attempt to push rates back down is the $64 question.

  • The Global EconomyFor the first time since World War II, the U.S., Japan, and Europe are in recession simultaneously. However, significant increases in stock markets around the globe sugg est the worst is behind us. 

  • The Bottom Lineunprecedented budget deficits tied to massive “stimulus” spending…more employment pain…modest inflationary pressures this year…extremely low short-term and volatile long-term interest rates…and a sick but soon-to-improve global economy.

Do you have a favorite economist with a different point of view?


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Linda Keith, CPA

Linda Keith CPA is an expert in credit risk readiness and credit analysis. She trains banks and credit unions throughout the United States, both in-house and in open-enrollment sessions, on Tax Return and Financial Statement Analysis.
She is in the trenches with lenders, analysts and underwriters helping them say "yes" to good loans.
Creator of the Tax Return Analysis Virtual Classroom at www.LendersOnlineTraining.com, she speaks at banking associations on risk management, lending and director finance topics.

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