Wednesday, June 24, 2009

OECD Report Sees Bottom

The OECD has issued a report that says the bottom is near for the US economy. Here is a quick summary:

The Organization for Economic Cooperation and Development said Wednesday that developed economies will shrink less sharply this year than it previously expected, and will grow next year.

The projection was the first upward revision to the OECD's growth forecasts since June 2007, before the financial crisis began. The International Monetary Fund is likely to follow suit when it releases new forecasts July 7.


Let's look at the good news in chart form. Click on all charts for a larger image


The credit crunch is ending -- yields are dropping.



People are selling the safe trade (bonds) and moving into stocks.



Inflation isn't an issue now and won't be because there will be tremendous slack in the economy. First,

Unemployment is already high and


The output gap -- the difference between what the economy could produce and what it will produce -- is the largest it's been in 40 years. This is a primary reason why inflation isn't an issue right now.