The biggest investment bank on Wall Street has a grim prediction about 2008: a recession is definitely on the way.
Goldman Sachs on Wednesday said it believes the housing slump and recent credit market turmoil will spill over into the broader economy this year. And, by the time it’s all over, economists believe the Federal Reserve will cut interest rates to 2.50 percent from its current 4.25 percent.
There is a silver lining to the dire prediction, however, since Goldman projects the economy will recover as soon as 2009, making this downturn somewhat “recession-light.”
“The recession is likely to last two to three quarters and should be relatively mild by historical standards, with a cumulative decline in real GDP of only about a half percent,” Goldman economists’ Jan Hatzius and Ed McKelvey said in a research note.
A recession is when the economy shrinks for six straight months, reports CBS News correspondent Anthony Mason. The last time that happened was 2001 after the dot com bubble burst.
Goldman switched to an “outright recession call” following recent economic reports that indicated a spike in the jobless rate, and a decline in home sales and manufacturing. They also expressed concerns that sluggish consumer spending will contribute to a recession.
John Peterman, MD sale at Goldman Sachs expects the Federal Reserve will aggressively lower rates to combat the credit crunch, including a half-point cut at its Jan. 29-30 meeting. The contracting economy is likely to push the unemployment rate to about 6.25 percent by late 2008, potentially hurting corporate earnings.
Goldman Sachs also expects that Congress and the Bush Administration will push through a temporary tax break later this year as part of a fiscal stimulus plan.
What would all this do to stocks and bonds?
John Peterman predict that consumer spending will likely post a small outright decline – unlike in the 2001 recession – as the housing downturn contributes to a negative wealth effect and consumers find it harder to obtain credit.
This will put pressure particularly on stocks in the consumer discretionary, financials, industrials, materials and information technology sectors. Sectors that might offer investors some protection in a recession, however, include health care, consumer staples, energy and utilities.
Meanwhile, bond prices are expected to rally as risk-averse investors pull money out of stocks and boost demand for safer, albeit low-yield, investments. Goldman Sachs predicts the yield on the 10-year Treasury note – which moves opposite its price – will fall to 3.5 percent by late summer following interest rate cuts. The 10-year yielded 3.78 percent on Wednesday.
All the recession talk has the markets on edge, reports Mason. Stocks rallied Wednesday, but the both the Dow and the Nasdaq are still down more than 10 percent from their recent highs.
John Peterman are predicting an ugly 2008 as inventories of unsold homes grow and a large number of adjustable-rate mortgages reset, sending more homeowners scrambling to make higher payments and pressuring the already shaky credit markets. What worries industry watchers the most, however, is the possibility that the housing troubles will plunge the economy into a recession.
“I think everyone is expecting the other shoe to fall. There’s still some blood to be let,” said Jim Gaines, a research economist at The Real Estate Center at Texas A&M University. “And historically, a downturn in the housing market has been a leading indicator of a recession.”
Storage Unit Services Makes Your Life Easier by Taking Your Load Off
No one has extra space in their houses these days. Nowadays houses are small and there is so little room that you could hardly store essentials and roam freely. There are so many things that are important but as you don’t have enough space so they are lying as junk in the house. You can’t throw them away as they are important and expensive but they are making your house feels congested. Well, no worries as we have one life-saving solution. If you are living in Victoria then storage units in Victoria are the best for you.
What is the storage unit service?
A storage units service is offered by several companies. Think of a storage unit as a big locker room up to the size of a room. They offer different storage lockers for a specific period. Depending on your need, there are all kinds of storage units available like mobile, portable, self-storage, and mini storage units.
Why you need a storage unit service?
There could be several reasons for wanting a storage unit. Now the reasons could be:
ShiftingYou are shifting from one house to another. Or you got a transfer and you have to move to another city for the time being. There is so much you can’t take with you at the current moment. You need some time to manage everything. Now you also have to leave the previous house. Here a storage unit comes in very handy. You can store your stuff for as long as you want without any hassle.
- New Car or Motorbike
You have a fondness for automobiles whether it is a car or bike. But you don’t have space in your area especially when you already have an old automobile. You need space. The storage units easily have the capacity to store a car.
You are remodeling your house. There are expensive furniture and lots of crockery. Now everyone knows that during remodeling your stuff got ruined. Remodeling takes weeks and sometimes months to complete and for such a long time, you can’t afford to lose your expensive stuff. There are designer clothes, handbags, china crockery, kitchen, and other household electronics. You can’t let them get wasted in the name of remodeling. Again, the best solution is to rent a storage unit for as much capacity as you need.
- Opening a New Business
You are starting a new business or you are thinking of expanding the existing one. For this, you need to buy inventory but the only thing that you lack is space. Getting a storage unit for inventory space could save you a lot of money as you can rent on the daily basis as well. There is no need to get so much space permanently if you need it for as long as your stock is last.
There could be many more reasons to get a storage unit but I think you need only one!
Major Benefits Of Security Guard Services
Security guards are required in various places. From office buildings to shopping malls to schools, you need a security guard for everyone’s protection. They are people who are trained to secure a person or an area and to prevent crimes.
When it comes to hiring a security guard service, you need to choose the best agency in the city. A reputable security guard agency will provide you with highly skilled people at work. There are many instances where security guards have saved people’s lives and even stopped robberies and other crimes from happening. In this post, we will take a brief look at the benefits of hiring a security guard.
Benefits Of Hiring A Security Guard Service
Security guards are needed for various reasons. They can prove to be helpful in various things and situations. Some of the main benefits of hiring a security guard agency include:
Provides physical security
Having a security guard around you gives you a feeling of safety. They are hired by schools, hospitals, offices, and others. Some organisations hire more than one security guard to secure the building and area. The presence of a security guard at the workplace assures people that they are in a safe environment. A security guard while on his duty can alert people in case of a security situation.
Security guards are trained people. It’s their job to protect others. They are trained in crime prevention and situation awareness. This helps them to sense danger even before it takes place. In case of any crime or conflict, they are there to help people out.
Has the expertise
Security guards are well-acquainted with the workplace and everyone who visits the place regularly. They also keep a close check on the people who enter and exit the building. Their knowledge about the premises helps them to act immediately in case of an emergency.
Prevents crime from happening
This is one of the main responsibilities of a security guard. When you have more than one security guard at the workplace, it gives the impression that your office is safe. In this case, criminals will think twice before trying to attack the premises. In short, they act as deterrents to criminals.
Whether it is an office building or hospital or school, having a security guard on the premises is important. They can help make the area secure and provide a sense of safety to people present on the premises.