Top Economists and IMF Head See U.S. Consumers Reviving Faster

It's nice to hear more optimistic economic forecasts for a change, rather than the doom-and-gloom predictions that have been more prevalent lately. According to Richard Berner, co-head of global economics for Morgan Stanley, and among the first economists to predict the recession, the U.S. consumer is actually stronger than most think, Bloomberg reports.

In fact, households are reducing debt and increasing their savings faster than anticipated, and it's this progress that households are making in repairing their financial positions that will give them more room to spend in the future. "The deleveraging timetable is nearly a year ahead of schedule," Berner told Bloomberg. This will help the U.S. economy avoid a relapse into recession and put it on course for 3% growth next year, he said.

According to recent data, the savings rate was 5.9% in 2009, up from a previous report of 4.2%. A report from American Express (AXP) recently showed a similar trend of more saving.

Several other respected economists, including Robert Doll, vice chairman of BlackRock, also agree with Berner, saying Americans are getting their finances in order, which should be good for retail stocks, Bloomberg reports.

Pessimists Still Foresee Long Retrenchment


Of course, not everybody agrees. New York University economics professor Nouriel "Dr. Doom" Roubini recently predicted 1% to flat growth the rest of the year. And David Rosenberg, chief economist at Gluskin Sheff & Associates in Toronto, who also was among the first economists to predict the recession, said on Bloomberg Radio that the U.S. faces "an extremely anemic economy for some time to come" as households retrench and "work off these debt excesses."

While Berner, Doll and the others look at the progress consumers have made, Rosenberg concentrates on the amount of debt remaining and the still high ratio of household debt to income.

Carmen Reinhart, a professor and director of the Center for International Economics at the University of Maryland in College Park, also thinks -- at least if history is any indication -- that the U.S. may face another seven years of sub-par growth as consumers reduce the debt they built up prior to the recession.

IMF Head Sides With the Optimists


But Berner's optimistic view wasn't the only one Monday morning. While Roubini recently predicted a 40% chance of a double-dip recession, International Monetary Fund Managing Director Dominique Strauss-Kahn, told CNBC a double-dip recession is unlikely.

Strauss-Kahn said stimulus spending had contained the crisis, and that the U.S. has taken the correct approach in dealing with the economic slowdown and making sure the recovery is sustainable.

"[A]s long as they will support [the recovery], finally it will pick up and create jobs," he said. But, the effect won't be immediate and will take at least a quarter or two before we know better.

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kolia

spend and spend. but save and save is so hard to do. the more people realize that the plain fact is that if you do not have the money to pay for it you do not need it. just say that tomorrow when i get some money i will save some and spend a tiny little. the wallets are full of plastic nowadays man. something got to give . thank you

September 14 2010 at 10:26 AM Report abuse +2 rate up rate down Reply
ggschk

I don,t give a Rats Azz how well Wall-Street is doing !.........We need Jobs in our Country !...As for the IMF this is just a part for the NWO

September 14 2010 at 10:17 AM Report abuse +2 rate up rate down Reply
Patriotic Paul

Hewre is the irony of our two party political system. democrats today are liberal spenders in our country. Liberally spending our money on some people who add little to society in an attempt to balance the haves and have nots who are the many. The republicans are liberal spenders on projects and investments in foreign lands in order to subjugate the massive amounts of cheap labor and protect the interests of those corporations and individuals doing business abroad. In order to enrich the American and to some extent foreign investor who are the few. Vooo doo economics on a global scale.

September 14 2010 at 9:11 AM Report abuse -1 rate up rate down Reply
6 replies to Patriotic Paul's comment
sjoberdix

Spending up because back to school for reason. Now no one will spend until Christmas. Thats if they're lucky. Oil still the catalyst of this mess, prices went up because of $4.00 a gal. of gas in 2006. Gas might of come down but the consequences haven't. Wallstreet wants us to live on 1967 wages but 2010 prices. Ex. 1967 a 1# of butter 0.67. Now $ 2.48 @ walmart. Spending is not up, prices are.

September 14 2010 at 9:02 AM Report abuse +6 rate up rate down Reply
1 reply to sjoberdix's comment
sjoberdix

Recent gains were because of Europes recovery. Well its 9/14/10, that came to a halt now that the data came out. Its time to fire the speculators. They are a waste of money. We can not afford to waste a single penny in these times.

September 14 2010 at 8:46 AM Report abuse rate up rate down Reply
k4jlp

ARE YOU KIDDING? AMERICAN WALLETS ARE CLOSED UNTIL THE FOLLOWING CONDITIONS ARE MET. #1 ENERGY PRICES ARE BROUGHT DOWN AND STAYS DOWN. # 2 JOB CREATION # 3 LESS OUT OF POCKET HEALTH CARE. TAKE OIL/CRUDE OFF THE COMMODITY MARKET, DROP THE PRICES 30% AND KEEP THEM THERE...THEN YOU WILL SEE SPENDING.

September 14 2010 at 8:02 AM Report abuse +5 rate up rate down Reply
1 reply to k4jlp's comment
CADNR

Your kids and grandchildren will pay dearly for your blunder of electing the Kenyan! I DON'T NEED NO STINKIN BIRTH CERTIFICATE!

September 14 2010 at 8:01 AM Report abuse -3 rate up rate down Reply
1 reply to CADNR's comment
clark8642

If we are too cheap to pay our own way what makes you think our kids or grandkids will pay their bills and ours? Actually the current President was born in Hawaii. But if your foolish enough to believe that our kids will pay our bills I guess you will believe anything the far right preaches. Maybe it's time that we cut expenses and, if we can't cut enough then, gasp and shudder, raise taxes.

September 14 2010 at 10:01 AM Report abuse rate up rate down Reply
qbsack12

Now if we can get Washington to do the same. But it won't happen.

September 14 2010 at 7:50 AM Report abuse +1 rate up rate down Reply
Dismayed

People who have jobs are smart enough to know that they need to pay down their debts and save because the worst is yet to come. Obama is a politician and not a very good one who reads the lines he's fed by his handlers and doesn't have a clue about governing, creating jobs, paying down the debt, keeping us safe at our borders, cities and towns, and overseas. We will continue to have high unemployment and ever higher deficits and debt as long as the same people control the government. The IMF is a joke as is the author of the article. Don't be distracted: Throw the bums out!. Reduce your tax footprint and shut off the the Big Government spigot. If there's a primary in your city or town, get out and vote. They are counting on you just giving up and letting them have their way.

September 14 2010 at 7:48 AM Report abuse rate up rate down Reply
dray907023

AS SOON AS THE GOVERNMENTS STOP BACK STOPPING EVERYTHING ONLY THEN WILL WE KNOW .THE CREDIT CARD COMPANIES HAVE SPOOKED THE CONSUMER BY JACKING INTEREST RATES AND CUTTING CREDIT LIMITS . THAT ACT ALONE HAS CURTAILED ANY HOPE OF GETTING BACK TO THE GOOD OL DAYS OF SPENDING .

September 14 2010 at 7:31 AM Report abuse +4 rate up rate down Reply
2 replies to dray907023's comment
otterdad48

Personal consumption habits of using credit were encouraged for years. Rather than raises easy credit was given. Frugality is the new religion. It is going to be harder for Wall Street to pump up economic bubbles in the future.

September 14 2010 at 7:45 AM Report abuse +9 rate up rate down Reply
otterdad48

Personal consumption habits of using credit were encouraged for years. Rather than raises easy credit was given. Frugality is the new religion. It is going to be harder for Wall Street to pump up economic bubbles in the future.

September 14 2010 at 7:45 AM Report abuse +5 rate up rate down Reply