Ten Predictions for 2009

I thought it would be fun to start off 2009 by making a handful of predictions as to what the coming year will hold in terms of your money and your lives. We’ll check back at the end of the year to see how I did.

The Dow will not go below 8,000 this year. I believe the stock market has already hit its “bottom.” Generally, when you see a long leveling off period even in the face of some bad economic news, the market is full of roughly equal numbers of buyers and sellers, and as soon as the news turns good, the sellers will disappear, leaving only buyers.

Furthermore, both the S&P 500 and the Dow will be up at least 10% on the year. I think that by summer, we’ll be hit with some reasonably optimistic economic news, causing some of the sellers to go away and for the stock market to go on a nice summer bull run. By the end of the year, both the Dow and the S&P 500 will be up at least 10% for the year.

The official unemployment rate will not get above 9% this year – but it will get close in the late winter/early spring. Given that banks can basically borrow money interest-free right now, many banks will begin lending to each other and extending credit to businesses again and the spring will bring both a thaw to the earth and to the credit markets. However, there will be a long winter between now and then as seasonal hires are laid off, bringing the unemployment rate almost to 9% – but not quite.

“Deflation” will be the big panic of 2009, especially early in the year. In the first half of the year, prices will continue to fall and people will begin to worry about a deflationary spiral, but during the summer, the stock market will begin to recover and employment will pick up and this talk of deflation will go away as a low level of inflation returns.

2009 will be the best year for individual savings this decade. There are going to be a lot of people out there with some very tight resolutions for 2009 that will make the savings rate for the year skyrocket compared to earlier years. By midyear, many of these people will have faltered, but the savings will be enough to make 2009 look like a real year of belt-tightening.

Barack Obama will announce at least one major surprising policy in the first month of his presidency. I believe there’s a “Manhattan” or “Apollo” style project in the works, most likely related to energy independence, and Obama will roll it out very early in his administration, possibly even during his inaugural address. Fiscal conservatives will hate it.

The economy will start to rebound late in the year, leading to a very strong Christmas season for 2009. Unemployment will drop going into the fall, resulting in a very strong Christmas season this year. People will make up for a pretty austere 2008 holiday season in 2009, setting spending records.

The government will take preemptive action against the oncoming bubble of option ARMs. In 2010 and 2011, a giant pile of option adjustable rate mortgages are set to adjust. The new administration will see this coming a mile away and quietly enact some policies to prevent this bubble from blowing up in our face. I predict a general policy to force option ARMs to be renegotiated.

The price of oil will creep upwards during the entire year, eventually putting gas prices near $3 a gallon again by the end of 2009. OPEC will cut production until oil gets back up into the $80-90 a barrel range. This may take several months, but eventually it will happen – and the price of a gallon of gas will follow.

One of the “big three” will fail and will be folded into the other two. I predict that Chrysler is no longer an independent company by the end of the year, and most of their brands are absorbed by General Motors. Dodge, at the very least, will be retained as a brand name, but the others (Chrysler, Plymouth, etc.) may fade away.

Fairly optimistic, huh? What are your predictions for the coming year?

If you enjoyed reading this, sign up for free updates!

Loading Disqus Comments ...
Loading Facebook Comments ...

61 thoughts on “Ten Predictions for 2009

  1. NCN says:

    Man, I hope you’re right! Personally, I think that the low gas prices that we are seeing now will serve to stimulate the economy. I know, personally, that my gas bill in December was 1/3 of what it was in July. If folks can save a few hundred bucks a month – and spend a few extra hundred a month – the economy might turn around.
    Have a blessed New Year…
    NCN

  2. Over the past many decades we have created a major bubble regarding commerce and consumption. So many excesses have been pumped into our lifestyles under the intense pressure applied by corporate marketing. We have been convinced that we require more of just about everything, much of which is non-essential or promotes unhealthy or stressful living.

    Perhaps we will continue along the same path, patching the bubble for an extension of another decade or more of the same. But we are going to pay the price one way or another, sooner or later when our life styles become simpler and more rational.

    On my 100 year Dow chart a baseline thru the 1942 and 1982 lows extended to the present is at about 3200-3400. I think we could touch this baseline but perhaps by leveling more or less for another decade or so.

    But who the heck really knows.

  3. Wake up, wake up! You’re dreaming! :) Happy New Year.

  4. Not to pick nits or anything, but Plymouth was dissolved in 2001. So I guess, technically, your last prediction has already come true…good job! :)

  5. Erik says:

    I hope you are correct with most of these, it will settle down the market and hopefully my 401(k) and IRAs will start making money again ;-)

    For the Chrysler prediction you forgot the Jeep brand. It will most likely stay, but my guess is only with the Wrangler & Grand Cherokee the other models may (should) die. The Dodge name may stay for the cars, but I think the pickups will likely go away since GM already has the Chevy/GMC pickup line that goes head-to-head with the Dodge Ram lineup. The good technology of the pickups will be rolled into future GM truck iterations.

  6. Pearl says:

    And why on earth should we believe you? What credentials do you have? You don’t even mention other countries in these predictions despite how global the crisis is.

    You are doing your readers a disservice by suggesting things could possibly be this good. Read a little more Nouriel Roubini if you want a realistic picture of how things will be from here on out.

    Keeping your head in the sand is not the same as being optimistic.

  7. Marsha says:

    These are really interesting, Trent. I had a LOL moment at “fiscal conservatives will hate it.” :D

    I hope you are right except about Chrysler. I give Chrysler a lot of credit for some design innovations that have kept American cars interesting. That said, I have no clue if Chrysler vehicles are mechanically reliable.

  8. Kevin says:

    Trent,

    I’d like to hope you’re right, but everything I’ve looked at suggests that several of your predictions – the unemployment rate, the Dow and S&P doing well in ’09, a strong 2009 Christmas season – are very unlikely. GDP is likely to be quite negative in Q1 and Q2: perhaps -4%. This will have a lot of ramifications for the entire economy,here and abroad.

    Until we begin to see existing home sales and housing starts begin to rebound and the employment picture begin improving, it will be ugly.

    Also – Plymouth as a brand CEASED PRODUCTION in 2001; sorry.

    Happy New Year anyway, and I sincerely hope you are right…

  9. neilxu says:

    The depression just begins and you think the situation will get better in 2009?

    In the next three or four years, things will become worse and worse.

  10. Jason says:

    The only thing I hate more than Republicans is the doomsday commentators who never fail to proclaim the end of the world or our economy going into recessions for years on end, etc etc.

    Lighten up!

  11. Mike says:

    Very optimistic and not very realistic. I’m predicating more of the same, Obama’s administration will attempt to spend us out of debt, creating far greater and reaching problems. A new conflict will arise somewhere in the world. There will be food shortages in the US, Job Revolts, Civial Unrest and major rioting. The unemployment rate will go to 10% and the market will go below 8000. I’m also predicating hyper-inflation not the slow inflation you predicate.

  12. Battra92 says:

    Sadly, I fear you are correct about Obama’s plan. There are no fiscal conservatives left in Washington and government will grow and get us further in debt. I forsee that as causing us to dig into a bigger hole, much as FDR did with the unconstitutional New Deal.

    Here’s hoping for a filibuster in the Senate.

    I see your predictions as way too optimistic. I see 2009 as a year of doom and gloom.

    Obama will take office totally unprepared for the job. He’ll be beholden to his far left interests that got him elected (unions etc.) and thus no real problems will be solved. He will be the most divisive president since, well Bush, and Government will remain in a deadlock.

    The government WILL raise taxes. The Bush tax cuts are set to expire and, instead of reducing government spending, the deficit and national debt will be addressed with new taxes. The idea of reforming the tax code will be again swept under the carpet and again the common man will lose out.

    The UAW will force one or two of the big three into bankruptcy. Thousands of people getting $70 an hour for tightening a lug nut will be laid off. Production of GM cars will (hopefully) shift to non-union plants, though possibly in Mexico or China. After all, China is their biggest market now.

    Americans will be more careful in their spending and you’ll see a lot more deal shopping. Brands like McDonalds, Campbell’s soup etc. will thrive. People will pass on $4 Colgate and Crest and instead pick up that $0.97 tube of Ultrabrite (made by Colgate btw.)

    If I have any good predictions is instead of a falling economy, we may get lucky and have a stagnant one.

    Oh well, at least my job is in a steady industry and we’ve already been informed that no layoffs will occur.

    But the mischief is done and the only relief for the American people is to shorten sail, seem down the top mast and prepare for a hurricane. (Paraphrasing a Civil War era newspaper)

  13. Modern Gal says:

    Trent, I am not as optimistic as you about the economy. I think the trend toward lower spending is a gradual structural shift, not a cyclical one and will take several years to unfold. While saving more and spending less is great for the household balance sheet (and a more sustainable way to live), the aggregate implications for the economy are not good. Plus, I am hearing of a lot of wealth destroyed in this sharp market downturn. This has hit the venture capital community and small businesses quite hard.

    I like your predictions better.

  14. DB Cooper says:

    I predict a stellar year for personal finance blogs!

    And as we’ve elected a man who when presented with the choice to cut or spend, voted to spend every single time, we better prepare to fund the largest government in the history of the world (larger, I mean, than even our present government!). And no doubt fiscal conservatives (wouldn’t that be those of us who are prudent and frugal with our cash?) will be furious. The money will come from us, folks.

  15. kristine says:

    I sincerely hope that the “Apollo” project is a major “New Deal” initiative to put people to work creating affordable housing.

    Then we will cut unemployment, restore hope, and we will not as a nation be “house-poor”. With the security of a home, we can all go out and spend!

    It’s better than throwing good money after bad into arenas in which we have no control of the outcome.

    But I am not nearly as optimistic as you Trent. When inflation hits- tighten the belt. When deflation hits..head for the hills with your canned goods.

  16. DB Cooper says:

    @ kristine wrote:

    “I sincerely hope that the “Apollo” project is a major “New Deal” initiative to put people to work creating affordable housing.

    Then we will cut unemployment, restore hope, and we will not as a nation be “house-poor”. With the security of a home, we can all go out and spend!”

    Right…because the government is so good at solving all our problems, and provide us with all the good things in live we need. I shudder whenever the government gets involved in “fixing” things, and even moreso when people ask them to do so.

    Then you write: “…When inflation hits- tighten the belt. When deflation hits..head for the hills with your canned goods.”

    Which, in either case, is better than demanding that the government come in and solve all our problems with hand-outs and programs.

  17. I hope you’re right about the stock market not going much lower. Oil has plummeted recently, which makes me think things are worse now than they were before.

  18. Ro says:

    I hope you are right about most of your predictions, but I fear you are not. :( I think it’s going to get much, much worse before it starts getting better.

  19. Your Friendly Neighborhood Computer Guy says:

    @pearl – Anyone can make predictions, regardless of “credentials”. And having a successful personal finance blog makes Trent more of an authority on the subject than most. Besides, he said he was just having some fun with this, don’t take it so seriously!

    Trent, I’ll be curious to see how these predictions play out. They are fairly optimistic, but I’ve found in my short life on this earth that the “doom and gloom” that always seems to be predicted never materializes.

  20. Anastasia says:

    I predict that gas prices will be $3+ by July, which is going to suck.

    My hope is that people will see this as a time to expand their knowledge, try new things, and make the most out of what they have. It’s a great time for people to be creative in the ways that they take care of themselves and their families. If we all went after this dreadful time with that in mind instead of lamenting on the state of the stock market, the world might be a little happier place.

  21. logical1 says:

    I would love to see you be right about most of these things but you seem to have a very “pollyanna” outlook on 2009. The troubles we are in will take a long time to work through them.

    I think you are right with the Dow not dropping though. I know plenty of people that are waiting for it to get close to that magical 8,000 number and they are planning to jump in with every penny they can if it gets close to that.

    I’d be very scared of the effects of a 10% increase in one year in any stock market… The faster the rise, the harder the fall (just look at the housing market).

    I hate it when people talk about unemployment rates… Let’s face it, at least 10% of the people in this country that are able to work are too lazy to do so. This is the area that needs the most modification in our country. We need to cut unemployment benefits and enforce stricter rules to getting benefits. If your job becomes obsolete, you need to learn a new trade or further your education to get a new job. I have no problem with assistance in this department but just to give people money to show up at the unemployment office every so often is insane.

    Deflation is probably something we need to see a little more of. There is a fine line to walk with this one and the odds of it getting out of control are pretty good but in order to move products, the prices have to drop right now.

    Even if we saw a 10% increase in the stock market, it will be very difficult for people to save this year. We simply can’t go from where we are now to a nation of savers in 12 months. People have been living so tight this last year with gas and food prices increasing that once they see a little extra money in the checkbook they will start buying those things they want… especially if prices continue to fall.

    Obama will announce a major program almost right away. But will it do any good? That is the million dollar question.

    Christmas of 2009 will be better than 2008. I don’t think it will be much better though. Gas prices would have to stay down, food prices will have to continue to drop and we will have to have solved just about all of the other financial woes going on.

    The future of the ARM’s has probably already been decided. I think we will see the government get deeper into the mortgage business and start buying these things up. They will reward poor choices with excellent rates.

    Gas will stay down. It may hit close to $2/gallon but I don’t see it ratcheting up that high again. OPEC will try it’s best but the oil companies will have to minimize the profits. One of the very few benefits I see of this new administration is that they will hold the oil companies in check by threatening a windfall tax on them. The move to alternative energy is also in full swing and that will help keep the pressure on.

    The big three is almost guaranteed to survive. We will pay dearly for it but they will be given money, waste it, given money again and waste it again and given money at least a third time this year. GM should be the last one allowed to buy anything, they have proven that they can not manage and run a business of any scale. I would love to see three things happen in this area: 1. GM forced into bankruptcy to be sold off to Toyota or Honda. 2. Chrysler’s parent company to be forced to support Chrysler. 3. The unions need to be broke up. There is a time and a place for unions, we have long since passed that time and place. The UAW is nothing but a legalized Organized Crime.

    There you have it….

  22. Modern Gal says:

    Trent, I think you are too optimistic. I think the shift away from consumption toward more saving is more of a structural, not cyclical, dynamic that will take several years to unfold. While saving more and spending less improves the household balance sheet, the economy suffers if everyone does this at the same time.

  23. “and as soon as the news turns good, the sellers will disappear, leaving only buyers.”

    If there are no sellers, who will the buyers buy from?

  24. gsb says:

    logical1 – You can’t just say we need to cut unemployment because people are too lazy to go out and get a job. There are hardworking people that are relying on unemployment benefits to get them through a tough time. There are people that have seasonal employment that count on unemployment to get them through the slow times. It’s not possible for them to go out and get another job because who is going to hire them for a month or two knowing they are going to leave as soon as their employer calls them back. Are there some that take advantage, absolutely, and I agree something needs to be done, but I don’t think that just cutting benefits would be the answer. I think it’s easy to say go out and further your education, learn a new trade, or get a new job when you have a steady income. For those that are unemployed, how do you pay for furthering your education or learning a new trade when you don’t have the money to pay for groceries?

  25. AnnJo says:

    There are only three ways the government can come up with money for huge new initiatives: tax, borrow and inflate.

    The tax option, while hugely appealing to the Democrats now in control of the political system, is the most limited. Huge new taxes on “the rich,” while politically feasible, simply don’t raise enough revenue. Huge new taxes on the middle class would be too unpopular.

    The borrowing option depends on finding willing lenders or lenders who can be forced to lend. Willing lenders are becoming scarce. I predict pressure will be put on public pension plans and union plans to lend more. But it won’t be enough.

    That leaves inflation. So I agree with you that deflation is a low risk.

    I also agree that the Dow will likely not go below 8000 in 2009.

    By no means all, but quite a lot of the stock market selling this last year was from fears triggered by election-oriented “talking down” of the economy. Goal 1 of that hype, Obama’s election, has been accomplished. As soon as Goal 2, major tax and regulatory legislation further socializing the US economy, is completed in the first 2-3 months of Obama’s reign, the new talking points will all be economic optimism. This will be aided by changes in labor and economic statistical methodology, as has been done in Europe to conceal the true rate of unemployment and inflation. That will fool some of the people for some time.

    Additional selling in 2008 came from those holding gains choosing to realize those gains in advance of Obama’s threatened increases in capital gains tax rates. Those sellers are likely now going to be buyers, although more cautiously than before. (Even in spite of the huge drop in the DOW, many long-term investors like me still had gains in our holdings.)

    I predict that by the end of Obama’s first term, government spending as a share of GDP will increase from its current ~37% (federal, state & municipal) to over 43% and that it doesn’t hit 50% will not be for lack of trying.

    So although I agree with you that the outlook for 2009 is probably fairly good, the longer term outlook is quite grim.

    However, all one can do is what one can do: In the face of overpowering forces, stay alert, diversify, don’t get swept up in “extraordinary popular delusions and the madness of crowds” and hold close to the important things – family, personal integrity, health, learning, good will and good cheer. And as improbable as it seemed at the time, there was a Reagan after there was a Carter, so there is always reason to hope.

    Happy New Year!

  26. Mark says:

    I hope you are right but I think that the DOW may retest its lows during this year.

  27. Attagirl says:

    I hope to see substantial New Deal-like programs to rebuild needed infrastructure and put people back to work. We need it, and that’s what government is for, in my opinion. It should work for the citizens and for the public good. Conservatives won’t like it, but sooner or later the pendulum will swing the other way again. It would be good to see several decades of progressive policies; however, that will be up to Americans. We will get what the majority decide it wants, as far as policies go. As mentioned, these are my opinions and I respect your right to disagree.

  28. Jim says:

    Interesting predictions and I like your take on things for the most part.

    Chrysler may vary well fail. Jeep is another brand they own that won’t die. That brand name is too valuable.

    I’m amazed at how over the top some of the union hate is from some people. Such anger against the unions is puzzling and I wonder where it really comes from. Ignorance or hate? UAW workers did nothing more than negotiate for good wages. They do not make $70 an hour and their wages are on par with japanese factories in teh US. Starting wages are now down to $14 an hour.

  29. Jim says:

    “Read a little more Nouriel Roubini”

    Roubini predicted a recession in 2004, 2005, 2006 and 2007. He was wrong 4 years in a row. Yes he got it right in 2008. But I wouldn’t put too much merit in someone who’s track record is 20% accurate in the past 5 years.

    Jim

  30. Ranga says:

    Nice article Trent. I shall revisit this page a few times in 2009.

    What is your opinion on this article? here a professor predicts the end of the US:

    http://online.wsj.com/article/SB123051100709638419.html

  31. momof4 says:

    mmm trent, the unemployment rate in Michigan is already 9%……

    like your positive outlook though :) if only we could be so fortunate

  32. Emma says:

    You’re an optimist, that’s for sure Trent! I think the markets will go up too – at the beginning of the year. I think once everyone gets over the high of the new prez they’ll dive again. I think that Obama will bring in a major green initiative too, but that it will have the additional aim to be cover for some serious US protectionism, which will give those of us elsewhere conniptions.

    Whatever happens, I’m invested for the long term and will continue to DCA every month, so will watch with interest.

  33. morgan says:

    Trent,
    unhappilly you probably choiced a short way to be discredited.
    Take a stock expert,his last five years “prophecies” and compare with end of the year results.
    You surely will be disapointed.
    A good book to be read :COME TO MY TRADING ROOM,Alexander Elder.
    Morgan

  34. Brian says:

    Re: your “fiscal conservatives will hate it” comment: Isn’t that what modern conservatism has become? Hating whatever solutions liberals offer?

  35. Ken Deboy says:

    I don’t see what is so “optimistic” about the idea of the government taking more control of the economy. The current mortgage crisis wasn’t caused by lack of regulation, it was caused by too much regulation, i.e. government requiring banks to make loans to people who couldn’t afford to repay them. With Democrats now in control of Congress, we’ll probably never find out if the resulting melt down was just an unintended consequence of trying to “help” people or intentionally engineered. Oh well. Hope you’ll be so optimistic when they propose a government take-over of IRA’s, 401(k)s, etc.
    I also don’t understand your comment about fiscal conservatives hating the idea of energy independence.

    Cheers,
    Ken

  36. forty2 says:

    I predict an “Obama” rally lasting til oh April or May. Then reality sets in and we will see all the major indices (not just the Dow, which is a fairly useless barometer) tank another 15-20% below the October lows of ’08; a massive sucker rally.

    Housing will continue to sink and the Alt-A/option-ARM resets will further depress prices.

    Oh and Ken, the government never forced any banks to make loans. If you’re thinking the CRA did this, think again. THe lenders threw caution to the wind and smelled fees and the ability to securitize the loans meant they didn’t have to care if the loans were ever paid off or not. It was a failure of regulation, absolutely, in every aspect of the financial industry.

  37. karen says:

    Hi, well I think the predictions are a little to optimistic..but we can only hope for the best these days and prepare for the worst.

    My philosophy this year and years to come…grow a garden..can can can…save money not having to buy so much groceries and having to run to the store all the time. Maybe I can even sell some to help bring more money in.

    Even with the lower prices in gas..I’m still living like its $4 a gallon. I’m trying to take the money saved each week and use it to pay some bills off. I still lump my errands all on one day and keep the places close to each other.

    I will continue to cook my own meals. I treated myself for New Years Eve had pizza at a restaurant..and all I tasted was salt. I guess I don’t eat as much salt a I used too. SO I’ve decided…not to waste any money eating out anymore. It no longer tastes as good as homemade.
    I will learn to cook more and more things myself.

    My goal is to save as much money as I can and build my nest egg back up from zero.

    Lastly..I’m dumping cable tv for an antennea..I’m tired of paying for lousy service.

  38. Heather says:

    I hope you’re right!! My husband needs a job SOOOO bad! We’d be really happy if that’s all we get this year!

  39. Josiah says:

    I have a feeling the only reason the Dow will rebound is because of inflation, and even then that is a stretch.

  40. logical1 says:

    gsb; I know I wasn’t clear, but I was trying to minimize an already long comment. For clarification purposes.. I have no problem spending tax dollars to re-educate or retrain people for a new line of work.

    As far as seasonal employment goes. If someone decides to make a living off of a seasonal position, then they should learn how to live year round on that seasonal position. Why should I support someone that makes a choice to work in a field that only employs them for part of the year?

    For what it is worth, my wife is a school teacher and I am a real estate agent… talk about rolling in the money (sarcasm intended). How are we surviving? I work an extra part time job and pick up other odd jobs as they come along. With the kids and elderly dependant, could we suck off the welfare dole to help us? If I quit the part time and odd jobs, we could and we would probably be better off financially. But would it be right when I’m capable of doing other things? No. I made the choice to be in real estate and now that the market is tough, I need to do what I need to do to survive.

    Back to my original thought… would bet dollars to donuts that at least 75% of the people collecting unemployment are milking the system. We have a system that encourages this and does not motivate people to get a new job. I think anything under 7% should be considered over employment (you have slackers getting paid to do nothing). 7%-11% should be considered acceptable unemployment (the market forces are working and there will always be a few people that want to work looking for work). Once we get over 11%-12% then we should start to be concerned.

  41. Troy says:

    Nice opinions.

    Here are some facts. A large majority of the reasons for the calamity we are now facing still exist.

    The number one reason – housing rate resets, has TEMPORARILY slowed. The second round, which is substantially larger than the subprime round one, is getting ready to happen within the next 6 months. The majority of rate resets are in 2010 and 2011. That means the major problem hasn’t even hit yet. 2008 was an appetizer. It will happen, there is no doubt.

    The fallout will be even greater than what we have experienced. We are about 1/3 of the way through, and the remaining 2/3 will make 2008 look like a walk in the park.

    Amplify 2008 by 2 or 3 and you have a likely picture of 2009-2011.

    Better save up.

  42. Kate@LivingTheFrugalLife says:

    “Fairly optimistic, huh?”

    Yes. Foolishly optimistic, in my opinion. My intuition disagrees with every one of your predictions except that the government probably will attempt to address ARMs and that people will save more this year than in any year in recent memory.

    As for the rest, I believe 2009 will be the year the other shoe drops.

  43. SP says:

    I think this was meant to be a fun guess, and some people took it more seriously than I imagine it was intended (unless I’m the one taking it too lightly). I think it would have been useful to emphasize that you aren’t claiming to actually know or even predict, you are just making some guesses. For fun.

    Anyway, I hope you are right, but i’m not as optomistic as you!

  44. hfcs says:

    “Roubini predicted a recession in 2004, 2005, 2006 and 2007. He was wrong 4 years in a row. Yes he got it right in 2008. But I wouldn’t put too much merit in someone who’s track record is 20% accurate in the past 5 years.”

    being early and inaccurate doesnt make you wrong. so he called it early, thinking surely things cant continue the way they did. unfortunately things carried on and were out of whack for too long.

    it’s like my situation where i refused to buy a house in 2003 thinking prices were way too high and would crash. i thought that in 04, 05, 06, 07. now we’re back at 04 prices and when we hit 02 prices i’ll put my foot in the water.

  45. Brad says:

    You’re an optimist. I like that about you.

    I disagree completely with all of your predictions however.

    1) the dow is going to sink around 7400.
    2) Gas will hit $6, or more. Opec is going to try to pinch us hard and set the tone for the next 25 years. Watch them proving a point this year just like 2008.
    3) Banks and lending less and less every day. That’s going to continue. Japan had a negative rate for awhile. I forsee this happening here.
    4) Job losses will not slow down, in fact they may speed up – bringing unemployment to a 12+% level by August.
    5) Consumer spending is going to decrease even more, causing widespread store closures, more job loss and less consumer confidence.

    2009 is going to be one of the worst years in American history in terms of average financial stability. Prepare, cut back, get frugal and buckle in.

  46. Michael says:

    Thank God for the consumer confidence decrease. It should be renamed the Consumer Foolishness Index.

  47. I really hope you’re right about the Obama announcement. I’d love to finally see someone in a leadership role make some massive change when it comes to alternative energy. We need to get off of foreign oil now and I’m so happy that Obama gets that.

  48. almost there says:

    Michael @ 4:19, read Jim Juback’s article on Fake inflation numbers of 5 Dec.

    http://articles.moneycentral.msn.com/Investing/JubaksJournal/fake-inflation-numbers-masked-crisis.aspx

    It is worse than the Gvt says. Most sceptics know this. I think I can last until 12/21/2012 when the poles shift and most die off. But than, I am retired so we shall see:)

  49. As long as the nation remains as bitterly divided as comments here reflect, we have noplace to go but down. It’s time to get off the partisan soapboxes, quit snarling at each other, and work together.

    I hope your optimism is justified. On the other hand, experience suggests that pessimists are happier people than optimists because our surprises are always pleasant….

  50. zit says:

    I agree with Trent Hamm. I think his prediction is 90% accurate.

  51. Rob in Madrid says:

    3 predictions

    1. the recession will be deeper and much longer lasting than anyone expected

    2. Americans will learn to save (much do to demographics

    3. Right Wingers will continue to whine and complain about how unfair it all is.

  52. Susan says:

    Those of you making spiteful comments about people collecting unemployment don’t actually KNOW anyone who’ve been in this position. My mother in law, who got completely screwed in her divorce, will have to work until the day she dies just to make ends meet, even though her ex husband was an executive at a major US corporation. She’s 70 years old, and just got laid off from her job last month. Yup. Shouldn’t be ANY problem for a 70 year old to get a new job in this economy, right? If she doesn’t, she must just be lazy, right? You people need to get a grip. You just *like* to believe people out there who are getting the shaft deserve it because then you can sleep at night supporting policies that effectively say to hell with those in our society who end up with the short end of the stick for any number of good reasons. I personally hope each and every one of you ends up in this position one day, and has someone sneer in YOUR face that you’re just “lazy”….

  53. Ken Montville - The MD Suburbs of DC says:

    Other than the option ARMs you really didn’t talk to much about the housing market which, in turn, fuels a ton of peripheral industries and services.

    How about this:

    1. the Dow goes to 10,000 and
    2. the Obama plan creates jobs, both of which
    3. release pent up demand for housing which will
    4. stabilize housing prices and add more jobs that are related to the housing industry.

    Hey, I can be optimistic, too!

  54. Jen says:

    I have absolutely nothing but my gut to base this on, but Trent, I agree with most of these. :-)

  55. Prasanna says:

    I stumbled upon your blogging site while looking for some good ideas for going frugal and I thought you had some GREAT site going here.. I even passed on the link to most of my friends and family and all of them were ecstatic.. That is, until you pulled this 10 prediction for 2009 thingie. I think 2009 will be a banner year for folks to really hunker down. If you thought 2008 was bad, 2009 will prove to be a LOT worse in almost all facets. Please don’t lose that frugal theme that defines your website. Don’t let the market action at the start of the year deceive you..

  56. Rob in Madrid says:

    “And as we’ve elected a man who when presented with the choice to cut or spend, voted to spend every single time,”

    Unfortunately the last “conservative” present handed a left leaning present6 with an even more liberal congress unprecedented control over the company having spend close to a half trillion dollars taking control in major companies. So if Obama does do a major left turn he had major help from Bush.

    One more prediction. The bail out of the Detroit three will prove to be good value for the money. The banks took 350 billion and horded it all (except for a few billion to give departing executives) where as GM took a mere 6 billion and has started lending again.

  57. Troy says:

    Having equal buyers/sellers has nothing to do with the markt not dropping below 8,000. The DOW components have all had problems, yet every time bad news comes out about the economy the DOW takes another hit. A better indicator of a market bottom will be when bad news comes out and the DOW does not react so dramtically… maybe not even at all.

  58. Chris says:

    I don’t like that prediction about the car companies. That will mean we have even less competition. I agree Chrysler will probably not make it, but what we need are more smaller car companies. I suggest GM and Ford break apart their many brands into different companies, so that there is actual competition again. We will see some very great innovation that way. Sure, some will fail, as they should, but we will get better quality cars.

  59. Matt says:

    The single best regulation the government could pass on to improve our economy is removing the requirement of appraisals for homeowners that want to refinance. Considering the government now directly relegates over 50% of mortgages through Fannie and Freddie, this single change could completely jumpstart the housing market. All those homeowners with ARMs that failed, or those with 6% or higher mortgage rates that want to refinance, and those homeowners with ARMs resetting in the next 6-12 months… could all be saved if they could just refinance at the current/lower rate.

    Instead of bailing out the banks, we need to bail out the homeowners. And this simple regulation change would not cost nearly as much as the $300B being given out soon as tax credits, and could actually create a huge revenue stream for the government as housing prices improve.

    Everyone should be crossing their fingers that this passes in the next 3 or so months.

  60. AnnJo says:

    Well, Trent, we were both wrong. I joined you in your prediction that the Dow would not go below 8,000 this year, and now, 20 days into this year, the Dow has gone below 8,000.

  61. Carole says:

    Hi there, this weekend is pleasant in favor of me, as this occasion i am reading this impressive educational article here at my residence.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>