Economic Forecast 2010
While many of us were just happy to see 2009 go and take its volatile stock markets, swelling unemployment numbers, and weak U.S. dollar with it. It's only natural to embark on 2010 with a degree of trepidation. Anxiety about financial markets is probably, on some level, smart – nobody wants to repeat recent history, and the easiest way to avoid it is to acknowledge and learn from our collective mistakes. The following is an extended 2010 financial forecast, which will hopefully be an aid to you as you navigate a still somewhat shaky economy.
Some Stocks Will Be On the Rise
Even though 2009 saw a veritable stock market roller coaster, the market was still up over 20 percent at the end of last year. The trick is hanging on throughout the many fluctuations. If you are willing to take a few risks, the NASDAQ could be a source of profits over the next several years. For those more comfortable with a safe bet (and who could blame you?) look to energy, health care, and bio-tech stocks, which are expected to perform quite well.
Interest Rates Most Likely to Stay at Historic Lows
Most experts strongly predict that interest rates will remain at present level, or very close to present level, over the course of 2010. The Feds have made it exceedingly clear their first priority is to nurse the United States timid recovery to a full recovery, and only then should we expect interest rate hikes. This stance is not without merit, either. No one wants to see already difficult borrowing become more expensive for squeezed businesses and consumers.
Dollar Will Probably Stay Weak
Unfortunately, the extension of our current interest rate policy will most likely come at a great expense to the U.S. dollar, which is expected to remain weak throughout 2010. Another factor not helping the dollar's status is the United States massive federal debt. Many foreign central bankers and other currency investors are cutting the dollar loose and favoring other currencies, such as the Euro and the Yen. This behavior is putting a lot of extra downward pressure on the dollar, which has already taken a beating. The dollar lost more than 10 percent against other currencies over the last six months.
Housing Market Could See Further Recovery
Due to timely federal tax credit programs, home sales have been steadily rising over the last several months, and new permits and home starts are on the uptick all over the country. While the markets that saw the most devaluation when the housing bubble burst haven't seen anything near a total recovery, thankfully prices in those areas have been trending upwards. Property values nationwide have increased over the last year by just slightly more than half a percent, but growth is growth. Continued growth is predicted, but could be jeopardized by the expiration of the home buyer tax credit (April 30, 2010) and a rise in mortgage rates, which are expected to jump to at least 6 percent for 30 loans by the end of the year.
