Year End Predictions

As part of our next group writing project over at The Finance Blog Network, we are sharing our predictions for how the remainder of the year will pan out for the economy.  Then, at the beginning of next year, we will see how accurate our predictions turned out to be.

Who Will Win The Presidential Election?

I think the election will be a close one but that Obama will come out ahead.  The McCain/Palin ticket has just made too many public-relations blunders of late and I don’t think they will recover.  That said, I think both did relatively well in the debates.  In fact, I might even go as far as to say Palin won hers.  Still, I predict Obama by a few percentage points.

How Will The Dow Fare?

This is a very difficult question.  The short answer is I have absolutely no idea but since I have to pick something, I’ll take a stab at it.  I think the most likely scenario is that the bailout will prop the market up somewhat for a few months.  Because of that, I think the Dow will finish slightly up from its current level  at about 11,000.

What About The Unemployment Rate?

I don’t think we will see much of a change in the overall rate of unemployment.  If my prediction about the market above is correct, we could see lower unemployment numbers but I think you have to temper expectations of a recovery in the job market because of on-going troubles in the real estate, financial, and auto sectors.

Will The Bailout Package Be Effective?

In a word, no.  It will probably restore confidence in the financial markets, but will do nothing to solve the underlying problems that caused this mess to begin with.

What Will Happen To The Dollar?

I actually see the dollar stabilizing against other major currencies because I think the recession will probably hit foreigners much harder than Americans.  The strong euro, for instance, depends on a strong global economy to soak up all their exports.  If trouble strikes, I don’t think the euro will hold up well.