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Hits & Misses 2009
by Cynthia Keyes
The following are some of GMS’ more significant predictions for 2009, which we were able to confirm either occurred, or didn’t occur in 2009. Unless otherwise noted all predictions are from the Winter, 2009 issue of “Intuitive Flash.”
Recession
Recession continues throughout 2009…
According to the National Bureau of Economic Research, the recession that started in December 2007 is the longest and deepest since the 1930s. It was triggered by the U.S. housing market’s collapse and the ensuing global credit crisis. While the economy is believed to have rebounded in the third quarter, analysts believe that ordinary Americans will probably not see much difference as unemployment will remain high well into 2010, restraining consumption. (Reuters, 10/12 /09)
…a new economic model shall emerge. This shall take … almost a decade to complete. But it begins here in 2009 where you will see a more austere consciousness. Thus, the economic model based on consumer spending shall not survive in its current form.
Consumer spending has decreased considerably, dropping by 4.3%, the steepest fall in 28 years, and the first time in history where household spending has fallen by more than 3% for two consecutive quarters. (Wall St. Journal, 2/27/09)
In addition, on June 26, the Commerce Dept reported that personal saving as a percentage of disposable income increased to 6.9 percent, the highest level since December 1993.
The Stock Market
Here the bottom has not yet been reached in markets, globally.
On Mar. 9, 2009 the Dow bottomed at 6,547, down 2,229 from the Dec. 08 year end close of 8,776. (CNN)
…there shall be further declines, for the greater impact on the economy has yet to come. It is the continuation of the real estate decline, but there is also that the consumer has exceeded his financing ability. … that debt becomes excessive … a pox upon the economy. Thus, in 2009 there shall be great declines economically. Yet, there shall be put into motion new rebuilding of the infrastructure of the country, even new factories being reconstructed.
On Nov. 19, 2009, Mortgage Bankers Association Survey reported that the overall third-quarter delinquency rate is the highest since the association began keeping records in 1972. The combined percentage of those in foreclosure as well as delinquent homeowners is 14.41 %, or about one in seven mortgage holders. The percentage of loans in foreclosure on Sept. 30 was 4.47 %, up from 2.97 % last year. High-quality prime loans with fixed rates traditionally considered the safest, make up the largest share of new foreclosures. Without jobs, borrowers usually cannot pay their mortgages.
The default rate for commercial real estate loans held by banks reached the highest in 16 years. At 3.4 percent, the U.S. default rate for commercial real estate mortgages -- on office, industrial, hotel and retail properties -- held by banks, thrifts and other depository institutions was the highest since 1993, when the default rate was 4.1 %. (Reuters, 11/30/09)
As to rebuilding infrastructure and factories, that has not happened.
Banks
Here there are more declines to come, and more difficulties ahead. The greater difficulties will be dealing with consumer debt. Here we find that these financial entities eventually become divided up, with many of their assets being sold. Thus, we see banks in dire shape…
As of Nov. 6, 119 banks have failed this year. (Reuters, 11/6/09)
Expect to see more localized banking becoming popular in 2009, smaller banks instead of the global or major entities of today.
According to Federal Reserve Chairman Ben S. Bernanke small banks could play a key role in spurring the nation’s economic recovery, as many appear strong enough to make new loans while bigger institutions have pulled back. In a speech, he told the Independent Community Bankers of America that the Fed has instructed bank examiners to encourage such institutions to make loans so long as they are “economically viable.” (Washington Post, 3/21/ 2009)
Economic Growth
Expect mass transit systems, high speed rail systems, and city transportation systems. This begins in its design stage, the rudimentary stage, in 2009.
On April 16, President Obama unveiled his administration’s blueprint for a new national network of high-speed passenger rail lines. Federal grants would also be directed toward separate individual rail projects that are deemed “ready to go,” with preliminary engineering and environmental work already completed. His plan would be funded in part through the $787 billion stimulus plan, which includes a total of $8 billion for improvements in rail service. Obama has also proposed a separate five-year, $5 billion investment in high-speed rail as part of the administration’s suggested fiscal year 2010 budget. (CNN)
…In addition, the forces are already in play to produce alternative energy systems. We see new plants being developed, new research facilities. Expect to see the breaking ground of a major green facility for research. This research facility does not produce; it simply researches and finds ways to improve, and make alternative energy systems more affordable.
On Oct. 15, U.S. Energy Secretary Steven Chu announced new investment's in three university-led wind energy research facilities that will enhance the United States’ leadership role in testing and producing the most advanced and efficient wind turbines in the world. The funding is from the American Recovery and Reinvestment Act, and the research will focus on improving both land-based and offshore wind generation.
Manufacturing
…there shall be greater declines in the first six months of 2009, but afterwards there shall be a re-emergence of manufacturing. In particular here, expect to see steel plants in the United States becoming active again. Expect to see a demand for aluminum, copper and all of the supplies that are necessary for the greater rebuilding, or the infrastructure conversions.
We certainly saw declines in manufacturing in the beginning of 2009, but although the demand for aluminum and copper increased, as reflected by the increased prices in 2009, (aluminum went from $.60 to $1.00, and copper rose from $1.30 to $3.16) we did not see an increase in manufacturing. (Kitco charts)
Housing
Housing continues to decline. Yet, we find here that as we get into the second and third quarter of 2009 there shall be an easing, so that people who have put off buying will get back into the market. The month of April or May will see an increase in housing purchases.
While housing sales were down at the beginning of the year, they began to climb in May and continued their upward trend through October, according to the National Association of Realtors Dec. report, led heavily by buyers taking advantage of the government’s expiring $8,000 tax credit.
… foreclosures shall continue throughout 2009.
By Sept., the rate of non-current loans, a combination of foreclosures and delinquencies as a percent of active loans, reached 12.49%, a record high in the US, according to a report from Lender Processing Services. The total US delinquency rate stands at 9.37%.
Metals
…copper, aluminum, and steel shall do well as the infrastructure rebuilding progresses.
Copper and aluminum did well (see above under Manufacturing). However, since the infrastructure rebuilding is just beginning, steel production has not yet increased.
… gold, silver, and platinum will be fairly stagnant for a period of time. Yet, an increase is inevitable… before the end of 2009.
I see gold breaking the $1,000 plus level this year. (IF, Spring, 2009)
In 2009, as of Dec. 15, gold went from $870 to $1120; silver rose from $11.08 to $17.18, and platinum jumped from $934 to $1437. Gold broke $1000 in Sept. (Kitco.com)
The Job Market
Here the greater workforce will be in the construction field, the mechanical engineering field, and in particular, the structural engineering field. Jobs that will deal with construction of highways, bridges, aqueducts, new factories, and various associated services will do well. Jobs that have to do with the conversion of factories from one type of production to another, like automobile, and truck production facilities for example, converted to producing commuter and high speed vehicles, will also do well. Manufacturers of construction materials and earth moving equipment will also do well. All of these will emerge in 2009.
I see unemployment exceeding 10 percent…before it begins to decline in late 2009, early 2010. (IF, Spring issue)
Unemployment in all areas is still high, though it has begun to taper off. In November, according to the U.S. Dept of labor, both the number of unemployed persons, at 15.4 million, and the unemployment rate, at 10.0 percent, edged down.
Construction jobs have not yet materialized. However, on Dec.8, Pres. Obama proposed new spending for highway and bridge construction, for small business tax cuts and for retrofitting millions of homes to make them more energy-efficient. (AP)
Food Production
… as consumers become more aware of nutrition and food quality, growers and processors adjust to comply. Expect to see this in a more significant way in the various cereal markets. As the awareness of nutrition and vitality increases… this becomes an important part of a philosophy that begins to emerge in 2009.
General Mills announced plans to reduce the amount of sugar in its cereals marketed to children. The move comes as many food companies alter their products and face growing scrutiny from consumers, regulators and health groups about the nutritional value of their foods. (USA Today, 12/10/09)
… as consumers become more aware of nutrition and food quality, growers and processors adjust to comply. The consumption of beef, in particular, begins a decline in 2009, 2010.
Meat production was down across the board in the first half of 2009; beef production fell 3.1%; pork 2.7%; and broiler production 5.8%. With demand for both beef and dairy poor, the national cattle herd has fallen to the lowest level in more than 35 years. (U.S. Agribusiness Report, 9/24/09)
Education
We find here that in the areas that deal with schools, and education there will be great changes. Funding will be provided for education so that a greater number of young people will be able to afford college in 2009. This indirectly reduces the influx of new people into the job market.
The American Recovery and Reinvestment Act of 2009 (Recovery Act) was signed into law by President Obama on Feb. 17, 2009. As of Sept. 30, over $67 billion in ED Recovery Act formula grants had been awarded. About 400,000 jobs were retained or created through these ED grants—325,000 of them education jobs. (US Dept. of Ed)
Health
The medical breakthroughs continue into 2009. Here stem cell and gene therapies will expand significantly.
The National Institutes of Health (NIH) announced on Dec. 2, that scientists can start using taxpayer dollars to do research with 13 batches of embryonic stem cells and dozens more cell lines that should be available soon. President Obama lifted eight years of restrictions on these master cells last spring. But $21 million-and-counting in new projects were on hold until NIH determined which of hundreds of existing stem cell lines were ethically appropriate to use. Another 96 embryonic stem cell lines are undergoing NIH review, and 20 or more could get a decision within the week. (AP, 12/02/09)
…A pill that will cure some types of cancer goes to trial in 2009.
A pill, consisting of a drug that destroys tumors in a form of inoperable lung cancer has been developed by scientists. According to a study published in the journal, Cancer Research, the treatment works by blocking the growth of the cancer cells, eventually causing them to self destruct. In early clinical trials, the drug killed all traces of the disease in 50% of the mice it was tested on, as well as blocking the cells’ ability to resist standard chemotherapy. (Sideway News, 11/11/09)
Health Insurance
This shall become part of the new expanding government. It will take many years to emerge, but it begins in 2009. The health insurance program that is held by government officials shall be a model for the rest of the nation, whether employed or not employed.
In 2009, the House and the Senate have each come out with their own version of a Health Care Bill. We’re still waiting to see if they can reconcile those bills and agree on one they can send to the President. However, on Dec. 9, a group of Senate Democrats agreed on a deal they hoped would surmount a disagreement over a proposed government-run health plan. To satisfy liberal Democrats, the agreement calls for creating a new menu of national insurance plans, modeled after those offered federal workers, including members of Congress, and their dependents.
The new, nonprofit insurance plans would be overseen by a well-established federal agency, the Office of Personnel Management, which now runs the Federal Employees Health Benefits Program and negotiates prices and benefits packages with private insurance companies. Private firms eagerly participate because of the large customer base. (NY Times, 12/9/09)
Oil
The current decline in price is temporary; there shall be an increase in 2009 … $75 and higher will become the norm in 2009.
The price of oil dropped below $50 at the beginning of the year, climbing to between $70 and $80 toward the end of the year. (Oil-price.net, 12/10/09)
Alternative Energy
There will be a breakthrough in a new form of battery… So see this as a chemical power plant that would develop the electrical force necessary to drive a motor.
Researchers have developed a new advanced Lithium Ion battery that will allow mobile phone and laptop computers to be fully charged in seconds. Electric car batteries may be charged in as little as five minutes. Solar and wind power generation could also benefit as better batteries could be used to store surplus energy. (Gizmag.com, 3/16/09)
The Environment
There is a movement, or an awareness of conservation currently, driven by economic conditions. As these economic conditions continue expect to see savings accounts increase and consumer spending lessoned in 2009.
Consumer spending has decreased considerably, dropping by 4.3%, the steepest fall in 28 years, and the first time in history where household spending has fallen by more than 3% for two consecutive quarters. (Wall St. Journal, 2/27/09)
In addition, on June 26, the Commerce Dept. reported that personal saving as a percentage of disposable income increased to 6.9 percent, the highest level since December 1993.
Conflicts
In Iraq, there shall be the withdrawal ahead of schedule, this is assured.
President Barack Obama has ordered the withdrawal of all combat troops in Iraq by Aug. 31, 2010, leaving up to 50,000 troops in advisory roles until the end of 2011. U.S. officials have said the pullout remains on track, but there are concerns about a possible bottleneck during the withdrawal if the bulk of troops are held until late spring or early summer. (AP, 12/7/09)
…There shall be a form of surge in Afghanistan.
On Dec. 1, Obama announced that 30, 000 troops would be sent to Afghanistan beginning this month. This is in addition to the 17,000 that he authorized to be sent earlier in 2009. (CNN)
Africa
This administration shall move to have greater influence, particularly with the United Nations, and we see a developing movement there to bring about a protection.
“Today, my Administration is releasing a comprehensive strategy to confront the serious and urgent situation in Sudan. For years, the people of Sudan have faced enormous and unacceptable hardship. The genocide in Darfur has claimed the lives of hundreds of thousands of people and left millions more displaced. …First, we must seek a definitive end to conflict, gross human rights abuses and genocide in Darfur. Second, the Comprehensive Peace Agreement between the North and South in Sudan must be implemented to create the possibility of long-term peace. These two goals must both be pursued simultaneously with urgency. Achieving them requires the commitment of the United States, as well as the active participation of international partners. Concurrently, we will work aggressively to ensure that Sudan does not provide a safe-haven for international terrorists.” (Statement from President Obama, 10/19/09)
Earth Changes
Key planetary influences emanating from Uranus and Neptune act as triggers for tectonic plate movements, particularly in the Indian Ocean. …where in 2009, 2010, there shall be not only plate movements, but tsunamis in the area.
Most of the activity in 2009 comes from beneath the ocean rather than on land.
In the months of August and September we saw three powerful under sea quakes, two of which devastated areas in the Indian Ocean, and one which struck in the Pacific Ocean. August 10, 2009, a magnitude 7.5 struck the Andaman Islands, India. On September 29, a powerful 8.0 undersea quake struck in the South Pacific about 120 miles south of Tonga and the Samoas. The quake triggered tsunamis that destroyed areas in American Samoa, Samoa and Tonga.
The very next day, on September 30, a 7.6-magnitude earthquake started at sea and quickly rippled through Sumatra, the westernmost island in the Indonesian archipelago causing massive destruction and loss of lives. (USGS)
In March, an undersea volcano erupted in the Tomga islands, shooting clouds of volcanic smoke, steam, and ash thousands of feet into the sky above the South Pacific Ocean. (AP, 3/19/09)
…We also see the Middle East, and Turkey in particular, experiencing earthquake activity.
Turkey experienced a 4.9 magnitude quake on Dec. 4, 2009 and a 4.6 magnitude quake on Dec. 12, 2009. (USGS)
Weather
As the planet continues to heat, it is reflected up into the atmosphere and back toward the oceans. This alters the temperature and direction of ocean currents, thereby affecting weather and land temperatures. Thus, we would find here that we will see more types of tropical storms, significant in number...
The world’s oceans this summer are the hottest on record according to the National Climatic Data Center.The warmer water could add to the melting of sea ice and possibly strengthen some hurricanes. It’s most noticeable near the Arctic, where water temperatures are as much as 10 degrees above average. The undersea storage of vast amounts of heat has serious implications for humanity’s future. Ocean-driven storms are showing signs of strengthening as their fuel source heats up. Sea levels are rising, too. Much of this is due to the expansion of ocean water as it warms…but over time the rise will be increasingly enhanced by glacial melting. (climatesciencewatch.org, 8/21/09)
Winter storms
We find that ice shall again be in the headlines for Canada, the Northeast, and other parts of the U.S. In the South, we see great storms, blizzards and again great ice. In particular, Mississippi, Tennessee, North Carolina, South Carolina, and Georgia will all experience great storms, mostly with the element ice.
A major storm January 26-29 dropped up to 8 inches of snow from eastern Missouri through Ohio, with 12 to 16 inches from southeastern Illinois through central Indiana. The storm also produced a large swath of freezing rain. Total ice accumulations greater than one inch were common along a line in Kentucky, from Paducah to Lexington. In northern Arkansas, the winter storm coated trees and wires with as much as two inches of ice. Up to 4.10 inches of precipitation was measured in Fayetteville. (NOAH)
On Dec. 5, 2009 snow started falling in the South and continued into the next day. Up to 6 inches of snow was reported in the D.C. region. Several Louisiana towns reported two to three inches of snow. The storm also dumped three to four inches of snow overnight in parts of Mississippi. At least 7,300 homes and businesses lost power in the state. Tennessee and North Carolina reported light snow at higher elevations. (Fox News.com, 12/5/09)
A gigantic winter storm hammered much of the Midwest and New England with dangerous ice, heavy snow and vicious winds. Beginning Tuesday, Dec. 8, it created blizzard conditions, and in some places buried cars under huge drifts. Hundreds of schools were canceled classes, power was knocked out to thousands of people from Missouri to New York, and hundreds of flights were canceled. By Thursday, the storm had moved into Canada. (CNN, 12/10/09)
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