The Economy - A Wharton Perspective

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2472

With an economy as "evolved", synthetically "CDO'd", "derivatived", tranched, and potentially re-regulated as here in the U.S., when solid positions are taken on how things are going by leading financial gurus, we listen.

K@W published an interview with Jeremy Siegel this week which was very positive on where the recovery is headed. Siegel is the leading finance professor on a faculty noted for its acumen in that area.

According to Siegel, the U.S. is in a "self-sustaining" recovery which is no longer dependent on government stimulus. He sees the current Dow @ 11,000 as having an "upside".

Interestingly, he takes that perspective while stipulating that it may take housing a while to recover.

Our concern about Dr. Siegel's perspective is that we have trouble reconciling some estimates that unemployment will not drop back to 8% until the end of 2011 with consistent market and GDP growth. If we combine housing with unemployment, the numbers are, at best, slow in recovering. What were Krugman's estimates of how many jobs per month that needed to be created in order to get back the jobs that were lost (8 million) during the worldwide recession? Our recollection was 300,000 per month for 5 years. Creating 150,000 jobs per month is just "break-even" (with new work force entrants from high school, college, etc.). The most recent number we've seen was 162,000 created, but doesn't that include new census jobs?

So, we like the positive outlook but we wait and wonder...