Tags: Olivier | Garret | Turning | Point

Garret: Double-Dip Recession Is Very Likely

Thursday, 04 Feb 2010 02:28 PM

Olivier Garret, CEO of leading economic research form Casey Research, which publishes multiple investing newsletters including The Casey Report, says his economic team sees 2010 as a turning point — but not for the better.

“Contrary to most economic forecasts, we anticipate that we will see another decline in GDP of at least 2 percent this year,” Garret told Newsmax.

Garret expects the budget deficit will stay around $1.5 trillion, and unemployment will grow from 10 percent to 11-plus percent, no new jobs created.

Video — Garret: Double-Dip Recession ‘Very Likely’

Every month 100,000 people enter the job market, Garret says — to lower unemployment, the number of new jobs created must exceed that.

“We don’t see that happening anytime soon,” Garret observes. People are investing and hiring only when they absolutely have to.

“We see continuing deterioration of the unemployment situation for at least two or three to four years, and if the U.S. government does not start addressing the issue, it could last much longer than that,” Garret concludes.

“We see unemployment going to 15 percent before anything gets better.”

Due to the amount of stimulus that the Federal Reserve and the Treasury have pumped into the economy, Garret recommends investing in commodities, especially precious metals and energy, and agricultural commodities to hedge against inflation.

“We see some weaknesses in oil and gas in the first half of this year,” Garret says.

“After that, we really see energy as being something the world needs … sources of cheap oil are running out across the world.”

Garret believes the dollar will strengthen in the next couple of months before continuing its decline, which Garret expects will reach about 10 percent this year.

He expects gold will reach $1350.

Garret also considers a double dip recession quite likely.

“Actually, we see a multiyear slump, a little bit like Japan’s last two decades,” he says.

“The big problem is the amount of debt the U.S. economy has at this point.”

The amount of U.S. debt — which for the third quarter of 2009 was 3.7 times GDP — is a huge barrier to economic growth, Garret notes.

When you add in all the unfunded obligations like Social Security, which did not exist in the 1930s … the total debt ratio is about 7 times GDP, a figure that has never been reached before in the history of the world, he said.

Garret forecasts that interest rates rising from all time lows will put “a very, very strong burden on our economy for many years to come.”

Though the power and influence of Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke has been seriously diluted, Garret believes it’s still too strong.

“Instead of addressing the fundamental issue of the economy that drove it toward collapse in 2008, which was too much debt,” they decided to use Keynesian theory to stimulate the economy by debt instead of allowing it to deleverage.

“This is failed policy, and they will continue to lose a lot of credibility as we see the temporary impact of the stimulus fade away,” Garret says.

Video — Garret: Double-Dip Recession ‘Very Likely’

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Olivier Garret, CEO of leading economic research form Casey Research, which publishes multiple investing newsletters including The Casey Report, says his economic team sees 2010 as a turning point but not for the better. Contrary to most economic forecasts, we...
Olivier,Garret,Turning,Point
518
2010-28-04
Thursday, 04 Feb 2010 02:28 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved