The outlook for GDP growth is better, but hardly exceptional, through the first half of 2011—something in the range of 3.3 percent through mid-2011. Inflation will remain below 2.5 percent and unemployment will remain at or above 9 percent into 2012.
A sovereign debt meltdown in Europe poses significant downside risks—it could thrust Europe and the United States into a double dip recession.
Baring such a calamity, here is my assessment.
Car and truck sales, technology replacements, better retail sales, and stronger exports lifted fourth quarter growth to about 3.3 percent, perhaps higher. Year over year, fourth quarter inflation was about 1.2 percent.
During the Great Recession, the average age of cars and trucks increased substantially, and private and commercial owners face costly maintenance expenses, making new purchases more cost attractive. Car and truck sales should improve to 12.36 million in the fourth quarter from 11.32 the first nine months of the year.
Personal and business technology sales got a similar boost, though the product mix continued to shift—you can hold in your hand what you carried in your backpack 2 years ago, and often left at home or in the office 5 years ago.