Tag: economics

The statistical game expands

The Market Ticker suspects shenanigans beyond the usual chicanery:

On January 5th the durables report for November was ‘released’. It showed a 0.2% increase. I didn’t write on it at the time, as it didn’t appear to be particularly consequential. The report, of course, came in the middle of the first-week January market rally. But now, in the dark of night, the number has been revised – to a decrease of 0.7%. The reason is a claimed “statistical error.” This, by the way, should have been obvious from the retail sales report, which I did write on.

Here’s the ugly – the Census’ link to the report is now listed as missing (that is, intentionally removed!) and what’s worse the link they refer you to, the “Historical M3 Releases” does not have the corrected November data – it only has releases through October on it.

That is, November’s report has disappeared.

I demonstrated the fictitious nature of government statistics in the chapter of RGD entitled “No One Knows Anything”. I suppose it’s easier to simply not bother making anything up, though. Since so few people even understand what the numbers are supposed to represent, why not just periodically shout “The Dow is at 12,000 and all is well!”

It would probably be more convincing anyhow.

Prediction 3 is looking good

“3. The Federal budget deficit for 2010 will exceed the projected $1.17 trillion.”
– December 28, 2009

It’s nine months too soon to declare victory, of course, but that prediction isn’t looking too bad as of January 13th.

The December figures bring to $388.5 billion the deficit for the first three months of Washington’s 2010 fiscal year. That’s on top of a staggering $1.4 trillion budget shortfall for fiscal 2009, more than three times the size of the deficit that the government ran in 2008.

In other words, the federal deficit is on a pace to hit $1.554 trillion in FY2010. Which is remarkably strange considering that we’re now six months into an economic recovery featuring 3.5 2.8 2.2% GDP growth. Say, doesn’t the GDP formula include government spending….

Animals spirits sink

The Market Ticker notes that consumer confidence is sinking:

There’s no good news embedded in here. Personal finances and the buying climate dropped by amounts matching their largest one-week change ever, possibly spurred by people getting their credit-card statements from Christmas (or simply reflecting on what they spent – and determining it was too much.)

Only nine percent rate the economy positively.

Shockingly, the news of the Federal Reserve printing massive profits for itself and bankers paying themselves huge bonuses hasn’t convinced people fearing for their jobs and cutting back on their expenses that all is well. And the whole “stock market advance as leading indicator” isn’t exactly the most convincing argument on offer in light of the fact that everyone can still remember what all the cheerleaders were saying when the Dow was over 14,000.

UPDATE – Speaking of animal spirits, Beau offers his services: “Against the backdrop of economic Götterdämmerung, I have some cheerful news that might pick up some animal spirits. beau.matchmakingservice -at- yahoo.com is ready to assist ilk wishing to discreetly make their intentions known to other ilk. Some of the more prolific posters certainly need no introductions, but in uncertain times animal spirits could perhaps use a boost. beau.matchmakingservice is available for regulars, irregulars and lurking ilk.”

Breeding Ilk… that’s all the world needs now.

Krugman gets it wrong… again

Imagine that:

Paul Krugman has weighed in to an ongoing debate sparked by Jonathan Chait’s criticism of a passage in my essay “Keeping America’s Edge.” I believe that I have responded to Mr. Chait’s assertions comprehensively. Unlike Chait, Professor Krugman has argued that I have presented incorrect data.

Krugman says this:

But I went back to Manzi’s source of data, and it turns out that it’s even worse than that. If you use the broad definition of Europe, which includes the USSR, it did indeed have 40 percent of world output in the early 1970s. But that share has not fallen to 25 percent — it’s still above 30 percent.

His assertion is flatly false.

First, Krugman has incorrectly identified my source of data. I have never corresponded with Krugman concerning data sources and analysis for the passage in question (unlike Chait, who was careful to contact me prior to publishing his blog post, and to whom I sent data sources and calculation details), so I cannot know on what basis Krugman asserts that the dataset to which he links is my “source of data.” It is not. As per the blog post in which I reviewed multiple data sources for the analysis in question, I averaged multiple sources of data. Krugman has selected only one of these sources, presented it as if it were my sole source, and therefore (obviously) failed to replicate the published result. The error is his.

Second, Krugman incorrectly interpreted the economic dataset that he did identify.

I know I’m shocked that A NOBEL-WINNING ECONOMIST could get it so wrong. And speaking of errors and Krugman, a recent reviewer of RGD managed to impressively cock things up in “correcting” my explanation of the loan multiplier in a fractional reserve system. Amusingly, he seizes upon this “error”, combined with the fact that I dared to criticize A NOBEL-WINNING ECONOMIST, to claim that the book “Should Never Have Been Published”. While I have to take responsibility for failing to distinguish between “the bank” and “the banking system”, our intrepid reviewer nevertheless managed to completely miss both the obvious context (the fractional reserve system) as well as the point (the increase in the money supply created by the loans). I’ll explain this in more detail later this week for the six regulars who are actually interested in this sort of thing as well as any anklebiters who would like to revel in the possibility that I am wrong about something, but if you’d like to verify this for yourself, I would encourage you to plug a 0.75% reserve ratio into the table in the Wikpedia example – note that I was completely unaware of this table until about two weeks ago – and compare it to the Loan Multiplier of 133.33x to determine for yourself whether Mr. Eskildson’s “correction” is on target or not.

It should be noted, that this method only provides an estimate for the amount of interest collected over the course of the year, since this completely depends upon the number of loan-and-deposit cycles that occur over the course of the year as well as the three caveats mentioned in the book. Using the 10x example from Wikipedia would mean that $4.80 in annual interest is collected, which is neither the maximum $6.67 mentioned in RGD nor the $0.0599 which the reviewer claims is the correct amount.

Economics and evolution

Scott Hatfield of Monkey Trials brings an interesting series of posts by David Sloan Wilson to our attention:

One important theme that emerged was the yawning gap between economic theory and evolutionary theory. Economists are very smart people, but when smart people take off in the wrong direction, they go a very long way. As Eric Beinhocker (one of the participants) recounts in his book The Origin of Wealth, neoclassical economics was originally inspired by physics and led to an enormous body of formal theory based on assumptions that are required for mathematical tractability but that make no sense from an evolutionary perspective…. If economics and evolution are different paradigms with a yawning gap between them, then it will be very difficult to get from one to another in an incremental fashion. Every time we try to make one assumption in economic theory more realistic from an evolutionary perspective, it will conflict with the other assumptions and will be resisted by those accustomed to the economic paradigm. Scientific progress will require comparing the two paradigms as package deals and accepting or rejecting them on that basis.

I have to say that it is refreshing to see an evolutionist admitting that perhaps economists may actually be intelligent, (their recent performance notwithstanding), and simply have a different way of looking at things. This is much preferable to the defensive shrieking and finger pointing we have come to expect from biologists forced to confront basic economic concepts. Unfortunately, the response to perfectly reasonable questions like “what is the average rate of evolution?” tends to be some variant of “You know nothing about evolution or science and the reason I can’t answer any of your questions is because you’re stupid!”

Well, that’s helpful. I’m much more convinced that you know what you’re talking about now….

Now, the Walrasian-Keynesian neoclassical formalist paradigm to which Wilson refers was a detour from the earlier and in many ways superior economics of Turgot and the School of Salamanca and it certainly has many weaknesses. Since I favor the Austrian School, I am by no means wedded to the mathematical assumptions and artificial equilibria which Wilson implicitly questions. However, despite the gaps, I also see many similarities between what has now evolved into a Samuelsonite Neo-Keynesian macroeconomic orthodoxy and the Neo-Darwinian orthodoxy of the evolutionists. Both scientific consensuses are highly intolerant of criticism, produce predictive models that are reliably wrong, and take an approach that should be labeled “Kuhn’s Ostrich” toward anything that might threaten their current dogma.

Unfortunately for the sake of evolutionists who are actually interested in improving their theories rather than defending their dogma, the time scale on which they operate prevents their theoretical flaws from being exposed as rapidly as is the case with illegitimate economic orthdoxies. Pure Keynesian general theory was vanquished during the recession of the 1970s, the two Japanese Lost Decades eviscerated the monetarist heretics of the Chicago School, and the current contraction should cause the collapse of the SNK synthesis over the next decade. The false dichotomy of monetarism vs Neo-Keynesianism has already been exposed; whether the successor is some Minskyite Post-Keynesian doctrine, the Austrian school, or, as I expect, a blending of the two with a strong dash of behavioral economics, economics will be greatly transformed.

While I have hopes for genetics eventually putting the final stake through the tattered remnants of TENS that still survive the modern synthesis, it’s quite clear that in the absence of an unexpected Kuhnian crisis, biology will continue to be handicapped by its reliance on what is at its core nothing more than a quasi-medieval philosophical foundation rather than a properly scientific one. But Wilson’s perspective is an unusual one and I expect to follow his Paradigm series with interest.

I am, however, more than a little dubious of Wilson’s attempt to construct an analogy fitting paradigms into evolutionary stable strategy. “Intriguingly, paradigms can be regarded as the intellectual equivalent of local stable equilibria in complexity theory and adaptive peaks in evolutionary theory.” This sounds suspiciously like Dawkins’s “meme” nonsense to me, especially in light of Wilson’s obvious awareness of the risks inherently involved in adapting concepts from one discipline into another.

Bernanke and the housing bubble

In which Ben Bernanke throws Barney Frank under the bus. Even if you’re not an economist, Ben Bernanke’s attempt to excuse the Federal Reserve for any responsibility in creating the housing bubble really has to be read to be believed. Here’s the one of the more damning paragraphs in the 36-page PDF:

First, the cumulative increase in housing prices shown in Slide 5 is quite large. Can accommodative monetary policies during this period reasonably account for the magnitude of the increase in house prices that we observed? If not, what does account for it? Second, house prices rose significantly during this period in many industrialized countries, not just in the United States. If monetary policy was an important source of house price appreciation in the United States, it seems reasonable to expect that, in an international comparison, countries with easier monetary policies should have been more likely to have significant rises in house prices as well. Is that the case?

With respect to the magnitude of house-price increases: Economists who have investigated the issue have generally found that, based on historical relationships, only a small portion of the increase in house prices earlier this decade can be attributed to the stance of U.S. monetary policy. This conclusion has been reached using both econometric models and purely statistical analyses that make no use of economic theory.

This is extraordinarily deceptive on several levels. Bernanke is first leaving out the fact that regulation of the banks is the specific responsibility of the Federal Reserve and is an inherent part of monetary policy given the fact that most of the money in the system is created by bank loans under the fractional-reserve system. He is, of course, limiting his implicit definition of “monetary policy” to interest rate targets, which is acceptable in general economic discussions but not in a specific one of this sort.

Second, it should be no surprise that Bernanke feels justified by the use of econometric models based on the Taylor Rule because the Taylor Rule is the very rule that was used to justify the Fed’s actions in the first place. As Mike Shedlock shows using Case-Shiller housing prices in the place of Owner-Equivalent Rent to calculate CPI-U, the Taylor Rule is fundamentally flawed because it is based on CPI-U. In RGD, I demonstrate a few of the many ways CPI-U considerably underestimates the real rate of price changes; the fact that it doesn’t even take real housing prices into account renders it entirely useless as a basis for defending the Federal Reserve’s actions or comparing the U.S. housing market with international housing markets.

No doubt there will be a lot of detailed critiques of this paper in the coming month. I may even write one myself. But in summary, “Monetary Policy and the Housing Bubble” is a shameless and deceptive attempt by a failed economist to justify his spectacular failure by using the very models that failed him in the first place.

I recognized the housing bubble in 2002; that is a matter of public record. Bernanke, on the other hand, was still denying it existed in October 2005, less than a year prior to its 2006 peak! “House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals, including robust growth in jobs and incomes, low mortgage rates, steady rates of household formation, and factors that limit the expansion of housing supply in some areas.”

Calculated Risk points out two more things that Bernanke conveniently avoided mentioning:

“Bernanke used data from other countries to suggest monetary policy was not a huge contributor to the bubble … however, Bernanke didn’t discuss if non-traditional mortgage products contributed to housing bubbles in other countries. This would seem like a key missing part of the speech.

Bernanke didn’t discuss how the current regulatory structure missed this “protracted deterioration in mortgage underwriting standards” (even though many people were pointing it out in real time). And Bernanke didn’t discuss specifically how the new regulatory structure would catch this deterioration in standards.”

The truth is that the Fed knew about the “protracted deterioration in mortgage underwriting standards” prior to the start: “Even before economic prophets of doom such as Marc Faber, Nouriel Roubini, and Peter Schiff became famous for their correct warnings of imminent crisis, Edward Gramlich, a governor at the Federal Reserve, told Fed Chairman Alan Greenspan that making home mortgages available to low income borrowers would lead to widespread loan defaults having extremely negative effects on the national economy. This extraordinarily specific warning was given in 2000, amidst the wreckage of the dot-com bomb and before the housing bubble even began. Those possessed of a mordant sense of humor may appreciate how Greenspan rejected Gramlich’s recommendation to audit consumer finance companies on the basis of his fear that it might undermine the availability of subprime credit.”
– Vox Day, The Return of the Great Depression, x.

GDP and recession

A total of 157.5 million persons worked at some point during 2008, the U.S. Bureau of Labor Statistics reported today. The proportion of workers who worked full time, year round in 2008 was 65.6 percent, down from 68.4 percent in 2007. The number of persons who experienced some unemployment in
2008 increased by 6.1 million to 21.2 million. This sharp increase reflects weak labor market conditions due to a recession that began in December 2007.

I found that last sentence to be interesting. Here are the latest GDP numbers from Q407 to Q308: 2.1, -0.7, 1.5, 2.7. Now, if the recession began before Q408, while the average quarterly GDP was 1.4 percent, how does 2.2 percent GDP growth indicate economic recovery? Especially when it is known that between two-thirds and three-fourths of that “growth” was related to the Cash for Clunkers program.

2010: economic predictions

“We are seeing early evidence of that recovery: Real gross domestic product (GDP) in the United States rose an estimated 3-1/2 percent at an annual rate in the third quarter, following four consecutive quarters of decline. Most forecasters anticipate another moderate gain in the fourth quarter…. My own view is that the recent pickup reflects more than purely temporary factors and that continued growth next year is likely…. As the recovery becomes established, however, payrolls should begin to grow again, at a pace that increases over time.”
– Ben Bernanke, November 16, 2009

“Nobel Prize-winning economist Paul Krugman said he sees about a one-third chance the U.S. economy will slide into a recession during the second half of the year as fiscal and monetary stimulus fade. ‘It is not a low probability event, 30 to 40 percent chance,’ Krugman said today in an interview in Atlanta, where he was attending an economics conference. Survey of Economists Krugman’s forecast is more pessimistic than the median estimate of 58 economists surveyed by Bloomberg News in early December, which called for a 2.6 percent expansion this year following a 2.5 percent contraction in 2009.
– Paul Krugman, January 4, 2009

“I think the U.S. will avoid a double dip recession, and 2010 GDP growth will be in the 2% to 3% range.”
– Calculated Risk, January 1, 2010

“Based on my reading, here is what I conclude the consensus views are as we head into 2010: Muted recovery, but positive growth, for sure! No risk of a ‘double dip’…. So here we are with a glorious opportunity to reintroduce Bob Farrell’s Rule 8: “When all forecasts and experts agree, something else is going to happen.”
– David Rosenberg, December 17, 2009

“Yun predicted that home prices will rise by 4 percent, while home resales, which are expected to reach 5 million this year, will surpass that level in 2010, hitting 5.7 million. Average mortgage rates will average roughly 5.7 percent, he said.”
Lawrence Yun, National Association of Realtors, November 13, 2009

“The U.S. economy next year will turn in its best performance since 2004 as spending perks up and companies increase investment and hiring, says Dean Maki, the most-accurate forecaster in a Bloomberg News survey. The world’s largest economy will expand 3.5 percent in 2010, according to Maki, the chief U.S. economist at Barclays Capital Inc. in New York.”
– Dean Maki, Barclays Capital, December 28, 2009

“Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. in New York, who was No. 1 among forecasters of GDP during the 12 months through June 2009. Hatzius, 41, estimates the economy will expand 2.4 percent in 2010…. Hatzius and the economists at Goldman Sachs project the unemployment rate will average 10.3 percent next year, compared with a median estimate of 10 percent for 58 responses in this month’s survey.
-Jan Hatzius, Goldman Sachs, December 28, 2009

“Neal Soss, 60, chief economist at Credit Suisse in New York projects the economy will grow 3.3 percent next year.”
– Neal Soss, Credit Suisse, December 28, 2009

“John Lonski, 58, chief economist at Moody’s Capital Markets Group in New York, was No. 3. He sees a 2.7 percent expansion.”
– John Lonski, Moody’s Capital Markets Group, December 28, 2009

“Robert MacIntosh, chief economist at Boston-based Eaton Vance Management forecasting growth of 3.5 percent, and that the jobless rate will average 9.5 percent.”
– Robert Macintosh, Eaton Vance Management, December 28, 2009

“Roubini sees a greater chance of a U-shaped economic recovery in developed economies, with a 20 percent to 25 percent chance of a double-dip.”
– Nouriel Roubini, October 11, 2009

Here are seven predictions concerning economic-related events I expect to see by December 31, 2010:

1. The BLS will report U-3 unemployment to be in excess of 11 percent. The actual number of unemployed workers will be much higher.
2. The BEA will report real GDP to be less than 12,973 in billions of chained 2005 dollars.  A “double-dip recession” will be the official description, but rumors of a “second great depression” will be increasingly heard as the evidence mounts that a single large scale economic event is taking place.
3. The Federal budget deficit for 2010 will exceed the projected $1.17 trillion.
4. More than 200 banks will be seized by the FDIC. Their deposits will represent more than two percent of all U.S. bank deposits.  (Specific calculation: 305 banks and 5.2% of total deposits.)
5. Commercial bank loans and leases (TOTLL) will fall below $6.3 trillion.
6. All sectors credit market debt outstanding, which is published in the Fed’s quarterly Z1 Flow of Funds Accounts, will fall below $52 trillion.  This will mostly be the result of continued deleveraging by the financial sector, and to a lesser extent, the housing sector, which between them will decline by more than $1 trillion.
7. The national median existing-home price will not rise 4% from $172,600 to $179,500 as predicted by NAR’s lead economist Lawrence Yun, but will fall below 165k instead.  And if there is the sort of crash that is implied by the preparations for SuperTARP, existing home prices will collapse below $140k.

I also expect an increase in Sitemeter-recorded visits to the blog to increase from 1,942,640 in 2009, (161,887 per month) to 2,250,000, primarily as a result of an increased interest in economic matters. The 1.9 million visits, (3,115,071 page views), was up 19.6% from the visits 1,566,254 in 2008. I still find it astonishing that so many people continue to be interested in my various thoughts and opinions, but thank you for stopping by and please feel free to do so throughout the year.

2010: the economic situation

As the new year kicks off, I’ve been trying to think of a way to explain the present economic situation in a simple and graphical manner that would not only illustrate the precarious nature of the US economy, but also explain my negative perspective on its prospects as well as the positive GDP reports and expectations on the part of mainstream economists. After wasting a fair amount of time poring over the usual BEA and BLS reports, I realized that because my analyses are primarily predicated upon debt, the only thing that made sense was to go back to the Fed’s quarterly Z1 report and look more closely at the sector data.  I have to confess that when the third quarter report came out a few weeks ago, I was surprised it did not show more contraction in the third quarter; total credit market debt only declined a further $113 billion from the revised Q1 2009 peak of $52.9 trillion.  The net contraction to date has only been 0.53%, which seemed weirdly small when the 8.7% contraction in commercial bank loans over the same period was taken into account.

But a look at the various credit sectors usefully clarifies this apparent dichotomy.  As the chart below shows, household debt reached its peak in the third quarter of 2008 and is down 1.75% since then.  The financial sector began reducing its outstanding debt a quarter later than the households, but is deleveraging much faster as its debt has fallen 5.93% from the Q408 peak.  Corporate debt has remained essentially flat since 2008, but the Federal government has, for the time being, been able to fill in the entire credit gap by increasing its outstanding debt by nearly one-third, 30.1%, in the four quarters since Q308!  State and local government debt has also increased, but by close to an order of magnitude less at 3.25%.  So, the reason we have not yet seen any significant effects of the debt-deleveraging in the household (-$242.8 billion) and financial (-$873.7 billion) sectors in the wider economy is because the Federal government has taken on an additional $1,743.4 billion of debt plus another $72.4 billion from the state and local governments to counter that contraction of credit.

So, the questions raised by this analysis are:  a) can the various levels of government continue to increase their outstanding debts faster than household, corporate, and financial debts decline, b) how long can the various levels of government continue to increase their debts, c) when will household, corporate, and financial debt stop contracting?  As of today, January 1st, 2010, the answers appear to be: a) No, the disparity of debt levels renders this impractical, if not impossible, especially since the early data indicates that household and financial debt is still declining. b) Probably not beyond the second quarter of 2010.  State and local tax revenues fell precipitously in 2009, many state and local governments are already on the verge of bankruptcy and the White House is already talking about attempting to reduce the 2010 deficit. c) given the growing number of mortgage and credit card payments reaching 60 and 90 days late, there is no sign of this happening in 2010.  In fact, much of the 2009 contraction that should have happened due to foreclosures and defaults has not yet been recorded on the books thanks to the extend-and-pretend policy presently in place.

The White House and the Federal Reserve are gambling that the contraction of household and financial sector debt will end before time runs out on their ability to increase Federal debt enough to compensate for that contraction.  But despite a panoply of credit-creation programs, changes to accounting laws, and regulatory easing, they are running out of time and there are still no signs of any further appetite for debt on the part of consumers or financial institutions.  The brief uptick in total bank loans from the middle of October to the middle of November has already given back its gains; TOTLL was still down 8.01% as of the most recent report on December 16th.  Therefore, I conclude that the White House already knows it lost its credit gamble, which is why it is now preparing the $4 trillion SuperTARP bill known as HR 4173.

Calculated Risk’s readers would appear to share my pessimism regarding the 2010 outlook, as 57% expect the economy to fall back into contraction. 

WND column

2010: The Year Ahead

While the Great Depression is considered to have begun with the great stock market crash of 1929, the first mention of the words “great depression” was in a speech given by Herbert Hoover in late 1931. The first specific and titular reference did not occur until 1934, when British economist Lionel Robbins published a book titled “The Great Depression.” This would neither be the first nor the last time economists influenced by the Austrian School would be the first to identify a major economic downturn in the making or to point out that the policies of the fiscal and monetary authorities were guaranteed to exacerbate it.

What then, are the prospects of enduring recovery? It is clear that they are not bright. It is quite probable, if there is no immediate outbreak of war on a large scale, that the next few months may see a substantial revival of business. If the exchanges are stabilised and the competition in depreciation ceases, there is a strong probability that the upward movement, which began in the summer of 1932, will continue. If the stabilisation were made permanent and some progress were made with the removal of the grosser obstacles to trade, it is not out of the question that a boom would develop. There are many things which might upset this development. The basis of recovery in the United States is gravely jeopardised by the policy of the Government.
– Lionel Robbins, “The Great Depression,” Page 195

UPDATE I – In the column, I neglected to specifically point out that if the present situation follows the historical precedent, public figures should first begin to recognize the existence of the Great Depression 2.0 two years after it began. This would indicate the fourth quarter of 2010.

UPDATE II – We are amused. Yesterday, I wrote this: “While some of the wiser economists are hedging their bets by stating that they expect growth to be “sluggish” with “downside risks,” there are no more expectations of market crashes, financial collapse or widespread economic contraction than there were at the beginning of 2008.” At the same time, Paul Krugman was anticipating his need to engage in the customary CYA of the mainstream economist: “Yeah, its a reasonably high chance [of economic contraction in the second half of 2010] – it’s less than 50/50 odds – but we have now a recovery that … is being driven by fiscal stimulus which is going to fade out in the 2nd half of next year….”

Reasonably high. Less than 50/50. Remember, that’s the finest that mainstream economics has to offer. Now, I don’t believe in feigning accuracy by assigning meaningless numbers that hint at nonexistent probability calculations, so I will simply say that 100 > 50/50. So speak up now, every doubter, anklebiter, and would-be critic. How many of you dare to publicly declare that all the mainstream economists are correct about the prospects for continued “economic recovery” in 2010 and that I am therefore wrong? Is anyone actually willing to go on the record and state that my rejection of the expert consensus is incorrect or not?

I’ll even provide some hard metrics and predict that by the end of 2010:

1. The BLS will report U-3 unemployment to be in excess of 11 percent. The actual number of unemployed workers will be much higher.
2. The BEA will report at least one quarter of negative GDP growth. The GDP figures for Q309 and Q409 will be revised downward. Again.
3. The Federal budget deficit for 2010 will exceed the projected $1.17 trillion.
4. More than 200 banks will be seized by the FDIC. Their deposits will represent more than two percent of all U.S. bank deposits.
5. Commercial bank loans and leases (TOTLL) will fall below $6.3 trillion.
6. All sectors credit market instruments excluding corporate equities and mutual fund shares liability, which is published in the Fed’s quarterly Z1 Flow of Funds Accounts, will fall below $52 trillion.
7. The national median existing-home price will not rise four percent from $172,600 to $179,500 as predicted by NAR’s lead economist Lawrence Yun. It will fall instead to a level I will attempt to estimate before the next NAR release.

These seven specific predictions are all directly contrary to what almost all mainstream economists are presently predicting for 2010; I am presently compiling a selection of economic predictions from all the usual suspects for future comparison.