Election-Year Politics Will Spur Programs to Boost Sagging U.S. Economy, Conrad Group Says

The U.S. economy "has been buffeted by bad news that doesn't seem to stop coming," observes William Nobrega, president and founder of The Conrad Group. Still, he says in a recent outlook report, a number of developments over the coming year should help to take the wind out of the crisis. Already, Congress has approved a $168bn stimulus package, the impact of which should begin to be felt in early summer. The Fed has initiated a series of interest-rate reductions, while intervening in the credit markets with a $200bn credit line. Nobrega expects additional action, with the Fed and other government entities being authorized by Congress and the Bush Administration to purchase up to $400bn of mortgage-backed securities. He also predicts passage of a $75bn stimulus package for upgrading U.S. infrastructure. By the fourth quarter, such actions, combined with renewed optimism stemming from a change of presidential administrations, should "move the economy rapidly out of a recession," he says. The last quarter of the year will also see a rally in the U.S. dollar, a drop in crude oil prices, and a sustained increase in U.S. equity markets, Nobrega says. As for the rest of the world, "The big story in 2008 will be China, with unprecedented capital inflows and an economy that is overheating."

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