Economic Commentary

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<strong>This week?s events</strong>

The main event during this busy week will be Wednesday?s FOMC rate decision

and we will be keeping an eye on the press statement. Before the Fed meeting

we will have some data to sift through. Today, we?ll get the Empire Manufacturing

Index at 8:30 and it is expected to rise marginally to -32.0 in March from -34.65 in

February. At 9 am, the TIC data is released and the market expects net foreign

purchases of US long-term securities to rise to $45 billion in January from $34.8

billion in December. At 9:15, industrial production is up and expected to drop

1.3% MoM in February on top of a 1.8% decline in January. Capacity Utilization is

expected to drop to 71% from 72% in January; this would be the lowest since the

deep recession of 1982. At 1 pm, we?ll the the NAHB Housing Market Index. This

index of homebuilder sentiment is expected to remain at 9 in March. Tomorrow,

we?ll be on the look out for producer prices and housing starts, which are

expected to plunge to 450K units annualized in February from 466K units in

January. On Wednesday, consumer prices are due and expected to rise 0.3%

MoM in February, matching the increase in January. This would keep the YoY

rate on headline CPI to 1.7%. On Thursday, we?ll get the Philly Fed Index, which

is expected to show a deep manufacturing contraction coming in at -39 in March

from -41.3 in February.
 
<strong>Consumers more pessimistic about current conditions</strong>

The preliminary reading for the University of Michigan consumer sentiment index

rose slightly to 56.6 in March versus 56.3 in February. This was higher than both

consensus and BAS-ML forecasts. The headline was lifted by higher expectations

over the month as consumers were likely more optimistic about the upcoming

change for lower tax withholdings as well as the recent rise in equity prices. At

the same time the current conditions index fell M/M as consumers continue to be

deeply concerned about their incomes, jobs and the overall economic

environment. Looking ahead, we believe the economic environment will continue

to challenge consumers, weighing heavily on sentiment readings for the

foreseeable future.

<strong>Details of consumer sentiment survey were weak</strong>

Within the U of M survey we noticed that the components were weak. Buying

conditions dropped. Homebuying conditions dropped to 139 in March from 146 in

February while auto conditions dropped to 123 in March from 127 in February.

Meanwhile, income expectations continued to crater; this component dropped to

111 in March from 121 in February. The index measuring expectations for real

family income dropped to 60 in March from 70 in February.
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<strong>NAHB Index remains low</strong>

The National Association of Homebuilders housing market index was unchanged

at 9 in March. The March result matched the median of analysts? forecasts. A

reading below 50 indicates that homebuilding conditions are poor. Two

components of the index were unchanged in March. The index of single-family

home sales was unchanged at 7 while the sales expectations 6-months out index

held at 15. Note that both indexes remain at record lows. Prospective buyer

traffic slipped from 11 to a new low of 9. Despite housing affordability at record

levels and mortgage rates relatively stable, rising foreclosures, excessive

inventories and falling sale prices will keep downward pressure on housing

construction through 2009.
 
<strong>Are we enduring another bear market rally?</strong>

It sure looks that way ? on average, they have lasted 26 days and have

seen the S&P 500 jump 13%. One did last 70 days and one did manage to

see the market advance 24%. The major reason why we believe this is the

seventh bear market rally instead of the nirvana start to a whole new bull

market is the pattern we can see in sector performance, because each one

of these flashy bear market rallies was led by the financials, followed by

consumer discretionary and then materials. It?s been no different this time

around, in the same order. The worst three sectors, health care, staples,

and utilities, have remained the laggards during this short-covering rally, as

they did in the other six.
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<strong>Latest rally smacks of short-covering and technicals</strong>

From our lens, the latest rally in the equity market yet again smacks of shortcovering

and technicals, similar to the other six bear market rallies of the past 16

months. The same pattern from an oversold low; the same sectors leading the

charge. This time last year, coming off the BSC-induced low, we rallied 4% into

quarter-end; we seem to be playing something of a similar chord this time around

from a short-covering standpoint. And the foundation for the current rally, based

on our conversations with clients, looks pretty shaky. Many point to signs that the

government is going to reinstate the uptick rule ? but all that will do is slow the

pace of the short-selling activity, it will not prevent it from taking place. And

others point to the potential termination of mark-to-market accounting ? which

may help stem the bleeding but at the expense of price discovery (Japan all over

again?).

Mostly everyone we talk to likes to point out that the data are ?less bad?, though

this is only true in some cases, and it looks like 1Q GDP may end up being as

bad as the fourth quarter of last year. Besides, if the market traded off the

?second derivative? of GDP growth, the S&P 500 would have peaked in the

summer of 2006, not the fall of 2007. We still see the need for consensus EPS

estimates to come down 30% from where they are today (we are now at $40 for

operating EPS for 2009; the bottom-up consensus is $63 ? where we were more

than six months ago), and since many analysts take management guidance to

heart, we see the potential for a slate of downside earnings surprises in coming

quarters. That said, Mr. Market can surprise the best of us, and we have utmost

respect for those pundits who see a ray of light shining less bright than we do at

this current time ? a break to 800 on the S&P 500 would be a sign to us that Mr.

Market is telling us we are dead wrong on the nature of this bounce, in terms of

its legs, and we will in this context be late, but that is the price we will pay for not

being wrong.
 
<strong>Homebuilders surged yesterday</strong>

Then again, the homebuilders surged 6.9% yesterday and the headlines pegged

the move on the housing start data: That begs the question as to how it is that an

82% jump in multi-family starts in the face of a 10%+ apartment vacancy rate is

good news for anybody. And what about single-family completions jumping 11%

to 373,000 units (annualized), which is more than 20% above the prevailing level

of new home sales, so the chances that we see the inventory backlog hit new

highs in the near-term and send residential real estate prices down even further

are very high, in our view.



<strong>Where will the jobs be?</strong>

With the government increasing its involvement in the private economy, more

undergraduate and MBA students are looking to the government for employment.

The Federal Reserve, FDIC and the Treasury have been recruiting business

students, especially at the start of the year to help implement the TARP. At the

University of Maryland, a government recruitment event drew 100 students. The

same event last year drew 10 students. For more, see page A11 of today?s WSJ,

?New MBA Job Search Leads Right to the Government?s Door.? Students could

also be going overseas. Take a look at page D4 of today?s Wall Street Journal,

?Programs Bulk Up Overseas.
 
[quote author="BondTrader" date=1237413483]<strong>Homebuilders surged yesterday</strong>

Then again, the homebuilders surged 6.9% yesterday and the headlines pegged

the move on the housing start data: That begs the question as to how it is that an

82% jump in multi-family starts in the face of a 10%+ apartment vacancy rate is

good news for anybody. And what about single-family completions jumping 11%

to 373,000 units (annualized), which is more than 20% above the prevailing level

of new home sales, so the chances that we see the inventory backlog hit new

highs in the near-term and send residential real estate prices down even further

are very high, in our view.



<strong>Where will the jobs be?</strong>

With the government increasing its involvement in the private economy, more

undergraduate and MBA students are looking to the government for employment.

The Federal Reserve, FDIC and the Treasury have been recruiting business

students, especially at the start of the year to help implement the TARP. At the

University of Maryland, a government recruitment event drew 100 students. The

same event last year drew 10 students. For more, see page A11 of today?s WSJ,

?New MBA Job Search Leads Right to the Government?s Door.? Students could

also be going overseas. Take a look at page D4 of today?s Wall Street Journal,

?Programs Bulk Up Overseas.</blockquote>
Yeah, I don't see how the increase in housing starts is being viewed as positive news. I mean, the last time I checked we have a huge inventory of unsold homes on the market and the vacancy rates for apartments are creeping up. Oh well, I wanted the market to go up anyhow so it's all good. Bear Market Rallies FTW!
 
<strong>We do not see benefits for equities</strong>

But beyond Treasuries, mortgages, the dollar, commodities and gold, we do not

see much in the way of lingering benefits for equities or for corporate bonds

outside of, say, tertiary or secondary impacts. As we highlight below, we believe

the fact that the Fed is going this far is testament to the view that the plethora of

other policies thus far have fallen short. We do not feel that the contours of the

business cycle, primarily the timing of the end of the recession, are going to hinge

on yesterday?s move any more than was the case in Japan.



<strong>The Fed is not buying equities and not buying real estate</strong>

The Fed?s actions, while helping to achieve lower interest costs and perhaps

unclog the arteries in the mortgage and asset-backed market, do not address the

reality of corporate earnings declining again this year to an estimated $40 (on

operating EPS). The Fed is not buying equities. The actions will do little to bring

the unsold new housing inventory down from its record high 13.3 months? supply,

so despite the cash-flow benefits from a refinancing standpoint, we do not see the

demand side being strong enough to bring this inventory below 8 months? any

time soon and until that happens, we believe home prices will continue to deflate.

The Fed is not buying real estate.

It was interesting to see the tepid reaction in the corporate bond market

yesterday. Then again, the Fed is not buying investment grade or high-yield

corporate bonds, either.
 
<strong>State and local tax increases to offset federal tax relief</strong>

Despite the fact that some Americans will begin to get some federal tax relief

starting on April 1st, the reality is that this will likely be offset to a large extent by

increasing taxes at the state and local level as these governments struggle to

meet their budget shortfalls. The latest casualty may be Illinois residents, where

the governor is proposing a 50% increase in the personal and corporate income

tax rates. He also wants to raise the cigarette tax by $1 and increase fees on

motorists. Meanwhile, in Philadelphia, the mayor is proposing sales and property

tax increases to preserve libraries and keep city services going. See page A7 of

today?s Wall Street Journal for more, ?Illinois Governor Proposes Broad Array of

Tax Increases? and ?Philadelphia Mayor Urges Sales, Property Tax Increases.?

And for more on the intensifying spending restraint at the local level see page

A21 of today?s New York Times, ?Public Hospital System Plans Cuts to Jobs and

Services.? New York City?s public hospital system said it was cutting 400 jobs and

closing some children?s mental health programs.



<strong>Travel spending drops sharply</strong>

Spending on travel and tourism dropped last year for the first time since the 9/11

terrorist attacks. Spending fell at a 22% annual rate in the fourth quarter. That

compares to a 19% drop in the aftermath of the September 11 attacks. For more,

take a look at page A3 of today?s Wall Street Journal, ?Travel Spending Sinks

Sharply?.
 
<strong>Commercial real estate sinks</strong>

Moody?s released its US commercial real estate price index and it sank 5.5% in

January in what was the biggest one-month drop in at least eight years. Prices

dropped 19.1% in the last year and are off 21% against the peak in October 2007.

<strong>

More frugality signposts</strong>

We caught this article on page D1 of yesterday?s Wall Street Journal, ?Pricey

Toys Are Going the Way of Dinosaurs.? The WSJ reports that families are making

big cuts in toy purchases this year to balance the household budget. We found

this quote particularly interesting: ?Beyond financial reasons, some parents are

shunning pricey playthings on principle. Fancy gifts are seen by some as a

symptom of excessive spending ? a bad lesson to children during an economic

downturn.?



<strong>Claims rise points to -750k payroll loss</strong>

Initial weekly jobless claims fell by 12k in the week ending March 14th to 646k,

better than consensus but still consistent with a huge loss in payrolls. The less

volatile 4-week moving average in claims rose to 655k, from 651k the previous

week, closing in on the all-time high of 674k back in 1982. Continuing claims also

pressed to still new historic highs, rising 185k in the March 7th week (these data

are reported with a one week lag), and are up 475k from the February payroll

survey period ? now at a record 5.5 million (and up 91% from a year ago!). Again,

our expectation is that nonfarm payrolls will decline by 750k in March and the

unemployment rate will jump to 8.6%, a 26-year high.
 
[quote author="BondTrader" date=1237586036]<strong>Commercial real estate sinks</strong>

Moody?s released its US commercial real estate price index and it sank 5.5% in

January in what was the biggest one-month drop in at least eight years. Prices

dropped 19.1% in the last year and are off 21% against the peak in October 2007.

</blockquote>


The clock?s ticking on General Growth



<a href="http://online.wsj.com/article/BT-CO-20090319-711860.html">Moody's Cuts General Growth</a>
 
Accounting Brothel Opens Doors for Banker Fiesta: Jonathan Weil



Commentary by Jonathan Weil



March 19 (Bloomberg) -- The banks demanded that the accountants give them leeway in how they report losses to investors. The accountants responded by giving away their souls.



This week, the Financial Accounting Standards Board unveiled what may be the dumbest, most bankrupt proposal in its 36-year history. If it stands, the FASB ought to change its name to the Fraudulent Accounting Standards Board. It?s that bad.



Here?s what the board is floating. Starting this quarter, U.S. companies would be allowed to report net-income figures that ignore severe, long-term price declines in securities they own. Not just debt securities, mind you, but even common stocks and other equities, too.



All a company would need to do is say it doesn?t intend to sell them and that it probably won?t have to. In most cases, it wouldn?t matter how much the value was down, or for how long. In effect, a company would have to admit being on its deathbed before the rules would force it to take hits to earnings.



So, if these rules had been in place last year, a company that still owned shares of American International Group Inc. or Fannie Mae, for instance, could exclude those stocks? price declines from net income entirely. It would make no difference that the companies were seized by the government last year, or that both are penny stocks. The loss would get buried away from the income statement, in a balance-sheet line called ?accumulated other comprehensive income.?



Desperate Bankers



These are the earnings we get when the people who write accounting standards give in to desperate bankers. And it?s no mystery why the three FASB members who voted for this -- Leslie Seidman, Lawrence Smith and Chairman Robert Herz -- did so. (The two who opposed it were Tom Linsmeier and Marc Siegel.)



Since the credit crisis began, the board?s members have been under assault by the banking industry and its wholly owned members of Congress. The most recent display came last week at a House Financial Services Committee hearing, where Democratic Representative Paul Kanjorski and other lawmakers beat Herz like a dog. Herz declined my request to be interviewed. A FASB spokeswoman, Chandy Smith, confirmed my understanding of how the rule change would work.



The banks want unfettered license to value their assets however they see fit, and to keep burgeoning losses out of their earnings and regulatory capital. The FASB had been holding its ground, for the most part. Now, though, the board has assumed the fetal position.



Differing Treatment



Under the current rules, securities get differing accounting treatments depending on how they are classified on the balance sheet. When labeled as trading securities, they must be assigned marked-to-market values each quarter, with all changes flowing through to net income. Otherwise, changes in value don?t hit the income statement, unless the securities have suffered what the accountants call an ?other-than-temporary impairment.?



While the term may be cumbersome, the idea is that companies need to show losses in net income once they no longer can pretend that an asset?s plunge in value is only fleeting. Think of a man who gets sent to prison for 20 years. That?s not necessarily a permanent sentence. Yet it?s definitely not temporary.



The board?s proposal tosses the old principle aside. Even if a loss is deemed not temporary, companies still would be allowed to keep it out of net income. There?s one exception: If a company holding debt securities concludes some of the decline is due to credit losses, that portion would need to be included on the income statement. Otherwise, the losses stay off.



You just know how this will turn out: Debt holders will say their losses almost always are due to something other than credit losses, such as liquidity risk, because it?s impossible to prove their judgments wrong. So the dents to net income will be minimal. That?s exactly what the FASB is trying to accomplish.



Investor Protection



There is something investors can do to protect themselves: Ignore net income and start focusing on the real bottom line, a term called comprehensive income, which is found on a company?s statement of shareholder equity. General Electric Co., for example, reported $17.4 billion of net income for 2008 -- and a comprehensive loss of $12.8 billion.



For years, the FASB has used comprehensive income as a dumping ground for losses that it has decided are too politically radioactive to be included on the income statement. These include changes in the values of corporate pension plans, foreign currencies, certain derivative instruments, and securities classified as available for sale. That?s why investors should stop giving credence to net income.



They have done this already with Tier 1 capital, the government?s main solvency measure for banks, which ignores lots of losses and treats some types of debt as if they were assets. Nowadays, bank investors are obsessed with a no-frills capital benchmark called tangible common equity. This leaves out intangible assets, such as goodwill from past acquisitions, and preferred stock, which acts like debt and must be repaid before common stockholders can claim any share of a company?s assets.



What?s good for the balance sheet is also good for the income statement. Enough with the fluff. Net is dead.



The FASB might be, too, if it keeps this up.
 
<strong>An unprecedented household wealth contraction</strong>

While the Fed announced an additional $1.15 trillion expansion of its

balance sheet last week, bringing the total expansion thus far to over $2 trillion,

this is really just a partial offset when you consider that the total amount of excess

credit in the financial system that has to come out in order to mean revert the

private sector debt to GDP ratio is almost $8 trillion. We also keep coming back

to the point that not most people continue to underestimate, which is that we are

dealing with a recession that is being compounded by a record $20 trillion loss of

net worth on the household balance sheet. This is a 30% wealth contraction that

puts us on a par with the 1930s experience.



<strong>A cloud over the consumer spending outlook beyond 2009</strong>

So, as the Fed has expanded its balance sheet by $2.5 trillion, and the federal

government has expanded its balance sheet by $2 trillion, the contraction of the

household balance sheet has been 5 times as large. This severe trauma on the

household balance sheet, when you consider that the wealth effect has a lagged

impact on the economy that can last up to three years, is going to cast a cloud

over the outlook for consumer spending well beyond 2009.
 
Deflation?



<a href="http://www.marketskeptics.com/2009/03/fed-is-planning-15-fold-increase-in-us.html">money supply</a>
 
<strong>Consumers cut back on prescriptions</strong>

According to Walgreen?s, consumers are cutting back to the point where they are

delaying filling prescriptions or are cutting pills in half to save money. Rising

economic problems are causing Americans to visit the doctor less often, which

means fewer prescriptions being written as well. Here is what the CEO of

Walgreen?s had to say: ?Consumer behavior has changed dramatically in recent

months, beyond just the kinds of products they are purchasing.? For more, take a

look at page B3 of today?s Wall Street Journal, ?Walgreen Sees Customers

Delaying Prescriptions.?



<strong>Consumers still keep their sweet tooth in a recession</strong>

Take a look at the front page of today?s New York Times, ?When Economy Sours,

a Tootsie Roll Can Still Soothe the Soul.? Industry experts are store owners have

been reporting that Americans are consuming growing volumes of Tootsie Rolls,

Gummy Bears and cheap chocolates. The following passage really stood out:

?There may be historic precedent to the recessionary strength of the candy

business. During the 1930s, candy companies thrived, introducing an array of

confections that remain popular today. Snickers started in 1930. Tootsie Pops

appeared in 1931. Mars bars with almonds and Three Musketeers bars followed

in 1932. Hershey, the dominant candy brand during the Depression, remained

profitable enough through the 1930s for the company to finance its own work

program for the unemployed, said Pamela Whitenack, Hershey?s community

archives director.?
 
<strong>Maybe yes; maybe no (is that an economist talking)?</strong>

From 1929 to 1932, we saw four 20%+ rallies in a long and drawn out near-90%

slide. We also saw three of these in the 1937-42 bear phase. And there were two

in the 2000-02 tech wreck. And ? we have now seen two of these in the current

bear market ? from the 752 intermediate low to the 934 intermediate high back on

January 6th for a rebound of 24% (much like we have today). That 752 low close

in November was ?supposed? to hold ?but it did not. And during that November-

January sugar high, there was no shortage of news-driven events ? the Fed

cutting to 0%, the announcement of the TALF, the Citi bailout, a huge fiscal

stimulus plan, to name a few. Now the 676 closing low (666 intra day) on March

9th is deemed by many of the experts to have been THE low. We are respectful

of that view, but skeptical nonetheless. Note that there were also no fewer than

SIX 20%+ rallies in the Nikkei since the secular 18-year, 80% bear market began

in 1990.

A 22% gain over 10 trading days is extremely rare ? last occurring in 1938.



<strong>We are in the throes of significant volatility</strong>

All we can say with certainty is that we are in the throes of significant volatility:

That the VIX could only go down 2.7 points, or less than 6%, to 43.23 is really

telling because what is normal off of a 5%+ surge in the S&P 500 is a 15% slide

in volatility. The VIX is no lower today than it was back on March 11th when the

S&P 500 was sitting at 750 ? so the market is either a great short right now or

VOL is a significant sell ? take your pick (because the last time we were over 800

on the S&P 500 the VIX was sitting just a snick below 43).
 
Treasuries Rise on Speculation GDP Shrank More Than Estimated



By Wes Goodman



March 26 (Bloomberg) -- Treasuries rose for the first time in more than a week on speculation government reports today will show the U.S. economy shrank more than previously estimated and the pace of firings is accelerating.



The Federal Reserve bought $7.5 billion of Treasuries yesterday, its first targeted purchases of U.S. securities since the 1960s. The central bank is expanding efforts to trim borrowing costs after cutting the benchmark interest rate to as low as zero last year. Ten-year yields are within 75 basis points of the record low set in December.



?Yields will stay around this level,? said Masataka Horii, one of four investors for the $47.9 billion Kokusai Global Sovereign Open fund in Tokyo, Japan?s biggest bond fund. ?The Fed will keep the policy rate at almost zero percent.?



The 10-year yield declined three basis points to 2.78 percent as of 9:44 a.m. in Tokyo, according to BGCantor Market Data. The price of the 2.75 percent security due February 2019 gained 7/32, or $2.19 per $1,000 face amount, to 99 25/32. A basis point is 0.01 percentage point.



Notes fell yesterday after a five-year auction drew a yield of 1.849 percent, higher than the 1.801 percent forecast in a Bloomberg News survey of eight trading firms. The Treasury will sell $24 billion of seven-year notes today.



?In light of all the supply that?s in the market it?s not a surprise that yields have moved back up,? said Jeffrey Caughron, an associate partner in Oklahoma City at The Baker Group Ltd., which advises community banks investing $20 billion of assets. ?You don?t want to fight the Fed in this market environment. Even though there is enormous supply, the Fed will do what it can to keep a cap on yields,? he said yesterday.
 
<strong>Seasonal factors skewing the February data</strong>

To be sure, there have been several data releases in February that have lined up

on the strong side of expectations. Caveat emptor on any February data point

that is seasonally adjusted at a time of the year when winter weather typically

forces most of the country into hibernation. This was no ordinary February. At an

average of 37 degrees (F), the month was two degrees warmer than a year ago

and four degrees balmier than two years ago. As we said, almost everyone likes

to talk about how the latest data have all of a sudden signaled a turn in the

economy, with retail sales, home sales, and yesterday?s durable goods report.



<strong>An aggressive seasonal factor in the durable goods report</strong>

Everyone was so excited about a 3.4% increase in February orders, and it seems

as though the headline was taken completely at face value. But again, like so

many indicators, the seasonal adjustment factor was extremely aggressive in

providing a record boost (in this case) to the top-line figure. Rest assured that if a

typical February adjustment factor had been used, orders would have shown a

5% collapse last month. We are still in the process of trying to figure out why this

happened ? it could be due to the mild weather compared to the last two years.

The YoY trend in the non-seasonally smoothed orders data shows that the pace

is still testing unprecedented negative terrain (-29%); ditto for shipments (-20%).

The durable goods inventory/shipments ratio at 1.88 is close to an all-time high.

That spells more production cutbacks and deflation pressure as we move into the

second quarter.
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Though I agree we are playing with overbought territory for the short term, and have fortified my portfolio with puts, so no worries here...but sounds like that last bit of news was generated on pure desperation...I mean are we seriously questioning data on 2 degree weather pattern differences? Sounds pathetic to me, and whoever wrote that could have come up with something a bit better.
 
<strong>Can you handle the truth?</strong>

The Fed and the Treasury are pulling out all the stops to bring mortgage rates

down and it is not too hard at this point to see them falling to historic lows of 4.5%

or perhaps even lower. Through the balance of the year, that rate relief should

total $115 billion at an annual rate (even if we see the mortgage rate go down to

4.5% from around 5% right now, most of the decline from the 6.5% level that

prevailed through most of last year is behind us). And starting April 1st, low- and

middle-income households will start to see withholding taxes coming off their

paychecks, which we estimate will total around $35 billion at an annual rate. So,

we estimate the tailwinds from monetary and fiscal policy, as far as the consumer

is concerned, are a hefty $150 billion at an annual rate.



The savings rate is on a visible uptrend and, by year-end, when we estimate it will

be closer to 7%, will likely have drained $175 billion out of spending. (Every one

percentage point rise in the savings rate, it should be noted, as a static standalone

development, is equivalent to 2.2 million jobs being lost in terms of GDP

impact). On top of that, we have job losses totaling an estimated 2.2 million from

now to the end of the year, and that comes at a cost of $110 billion to personal

income (again, at an annual rate).



Based on our assumptions on asset values, we think the negative wealth effect

could end up posing a drag on spending to the tune of $400 billion at an annual

rate through year-end. These headwinds amount to an estimated $685 billion,

offsetting the stimulus by nearly a 5-to-1 ratio. On net, the $535 billion drag on

consumer spending is equivalent to a 5% contraction, though we anticipate that

there will be more offsets in the form of further fiscal stimulus and expansion of

the central bank?s balance sheet.
 
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