There are no fast solutions – either for the US economy or for individuals trying to rebuild retirement funds clobbered by the falling stock market.
That was the message from Mark Zandi, one of the nation’s top economists. Mr. Zandi is co-founder and chief economist of Economy.Com, a firm that provides various kinds of research to individual, business, and corporate clients. He was the guest at a Monitor-sponsored breakfast for reporters on Thursday
Waiting and waiting for the Dow
How long will it take the stock market to recover? “It could be a decade,” Zandi said. “If I were an individual thinking about the size of my nest egg, and what I would need for retirement, I think the appropriate assumption is that I am going to get 5 percent annualized returns on my assets.” Many investors enjoyed much faster growth before the stock market collapsed.
For the US economy, things are getting “measurably worse,” Zandi said. He predicted 2009 would be a “very difficult year -- washout,” with the economy contracting 2.5 percent. That is twice as big a decline in economic activity as the Obama Administration predicts in its budget.
Growth again in 2011
As for 2010, “I don’t think we go anywhere -- basically a flat year,” Zandi says. He added, “I think we get growth in 2011.”
Zandi has bipartisan credentials. He was an advisor to the McCain presidential campaign in 2008. The New York Times recently referred to him as a McCain campaign adviser who has become the Democrats’ favorite economist because, unlike Mr. McCain, he backs the stimulus spending. Zandi gave a presentation at last week’s White House fiscal summit.