Wanna See A Bullish Forecast For The US? Check THIS Out

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The Milken Institute just released their latest U.S. economic outlook and it’s shockingly more bullish than most forecasters, even at the brokers.

The think tank expects U.S. GDP to grow to exceed 3% not just this year, but in 2011 and 2012 as well.

More importantly, they expect substantial employment growth,  and this is an integral part of their analysis.

Milken Institute:

Despite the formidable obstacles in its path, the U.S. economy remains flexible and resilient—and right now, it has more underlying momentum than is generally acknowledged. Our projections show cause for measured optimism: A return to modest but sustainable growth is close at hand.

Source: Milken Institute

Source: Milken Institute

They expect stronger GDP growth than the U.S. has had in a while

Source: Milken Institute

Consumption will come back

Source: Milken Institute

Source: Milken Institute

Housing starts will pick up by 2012

Source: Milken Institute

The deficit as a % of GDP will remain ugly until 2013

Source: Milken Institute

Even the states will rebound

Source: Milken Institute

Interest rates will be held ultra-low

Source: Milken Institute

What will drive the recovery?

'Multiple factors are influencing the rate of recovery: Robust (albeit moderating) economic growth in developing countries, particularly in Asia, will provide support for U.S. exports. Improved business confidence is already spurring strong investment in equipment and software, and a more upbeat consumer will begin to make previously postponed purchases of durable goods. Record-low U.S. long-term interest rates (partly related to a flight to quality from European markets) are helping to support recovery, and the currently benign inflationary environment allows the Fed to keep short-term interest rates near zero until late this year or even into 2011 if it desires.'

Source: Milken Institute

Now take a moment to view the rebound so far...

Source: Milken Institute

Source: Milken Institute

Source: Milken Institute

Source: Milken Institute

Still lower than before, but rebounding

Source: Milken Institute

Source: Milken Institute

Source: Milken Institute

Source: Milken Institute

Source: Milken Institute

Source: Milken Institute

One challenge... but this always lags a recovery

Source: Milken Institute

Source: Milken Institute

Source: Milken Institute

Housing will lag as well given how badly it was hit

Source: Milken Institute

Source: Milken Institute

Source: Milken Institute

Source: Milken Institute

Source: Milken Institute

Source: Milken Institute

How this recovery will compare against past ones

Source: Milken Institute

They're more bullish than most, but not very bullish relative to history, they say

'Historical context offers further reason to expect a clear rebound. The peak-to-trough decline in real GDP during the Great Recession was 3.8 per cent, making this the most severe downturn since World War II. But throughout the postwar period, the rate of economic recovery from past recessions has been proportional to the depth of the decline experienced. While this relationship has been somewhat variable, it is nevertheless well-established. Concluding that previous patterns will not apply to this business cycle seems a bit premature. Our projections for GDP growth are above consensus, but substantially below a normal rate of recovery after a recession of this severity.'

Source: Milken Institute

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