Tags: jeremy | Siegel | Pessimists | Bears | Wrong | Economy | Rebound

Siegel: Pessimists, Bears are Wrong – Economy to Rebound

Thursday, 18 Nov 2010 09:10 AM

The United States faces a positive economy despite the pessimism projected by the bears, said Jeremy Siegel, a professor at the University of Pennsylvania’s Wharton School.

“History shows that pessimists, no matter how fashionable, have always been wrong about long-term prospects for the U.S. economy and the stock market. This time is no different,” he said.

The persistent doom and gloom is “misplaced,” Siegel wrote in his latest column for Kiplinger’s.

“The specter of inflation has been replaced by fear of a trio of other dire prospects: deflation and financial collapse, the long and painful unwinding of an economy that has gorged on borrowed money, and the prospect of millions of baby boomers selling their stocks to finance an increasingly bleak future,” he said.

Siegel disagrees with Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co. Gross says that consumers will be unable to return to previous spending levels.

“But long-term economic growth depends on productivity growth, not on the debt load of consumers. In fact, productivity growth has been accelerating over the past decade, averaging 2.7 percent per year, or 0.5 percentage point above its long-term average. In the past this growth has generated the income necessary to propel the economy forward, and it will do so again,” he said.

Price drops remain, which demonstrate that Fed policymakers “have accomplished almost nothing in arresting the decline in prices throughout the economy,” said Dan Greenhaus, the chief economic strategist with Miller Tabak & Company, the New York Times reported.

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The United States faces a positive economy despite the pessimism projected by the bears, said Jeremy Siegel, a professor at the University of Pennsylvania s Wharton School. History shows that pessimists, no matter how fashionable, have always been wrong about long-term...
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2010-10-18
Thursday, 18 Nov 2010 09:10 AM
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