- "We continue to anticipate subpar growth in 2010, with both the pace and composition of the expansion being very different than what we are used to or what we may wish. We are far from a sustainable growth trend in line with our historical experience. The expected pace of the expansion is characterized by real growth of 2.0 percent in the second half of 2010 with inflation (core PCE deflator) at just 1.2 percent (Figure 1). Positive contributions to growth will likely come from rising consumer spending, business investment—particularly equipment and software, and of course, federal spending. The problem remains that the recovery represents a different type of cycle with the added complication of atypical behavior among core sectors—especially consumer spending and housing."
- "Our forecast shows federal spending stimulus will continue to be applied in the second half of 2010 and will only gradually begin to slow as election-year imperatives take over. Hopes for a swift recovery continue to meet with disappointment due to housing and the slow growth in consumer spending relative to historical averages. For the United States the modest pace of expansion implies only slow improvement in the labor market with a persistently high unemployment rate."
- "The convergence process to a new economic equilibrium has been more difficult than policymakers estimated. Job growth has been limited. Credit growth has been restrained and the recovery in housing far less significant than promised by policy makers. Slow real economic growth will likely create political pressures in the fall as economic realities fall short of political rhetoric."
- "Finally, concerns remain about the long-run pace of growth in the economy as well as the ability of the recovery to sustain itself at a pace that meets the expectations of consumers and workers. It is not yet clear how much of the recent economic upturn can be sustained without government support over time."
Wells Fargo Special Commentary 20100701
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