Estimates for economy in 2010

by Tom Tousignant

in Blog

Here is a nice looking chart I found with the consensus estimates for economic growth in 2010 from Bloomberg:

Bloombergs consensus estimate for 2010 GDP growth

Bloomberg's consensus estimate for 2010 GDP growth

In regards to mortgage rates, what would these outcomes have for home buyers?  On the right, a stalling economy keeps rates low as the threat of inflation is kept away. You’d see rates in the low 5% range continue for  a while.  On the Left, the overheating economy would lead to real fears of inflation, so interest rates would rapidly climb.  The trouble on that side would be seeing if the Fed could remove the extra cash from the economy fast enough to keep inflation from taking root, or running away.  In the middle, the Goldilocks’ scenario, you have rates gradually climbing, likely to a more normal 6.0% to 6.5%.  That’s about where they were in 2007 before the financial crisis started.

As I look at this I remember the quote that says somehing like, “The only reason for economic forecasts is to make Astrologer’s look good”!

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