THE CALENDAR IS AN ARTIFACT, a 12-month period unrelated to the fundamental movements in the U.S. and world economies. For that reason, and because so many others feel confident enough to offer detailed and precise forecasts of what is in store for us in 2007, I am inclined to leave such chores to economists willing to provide guidance to those who need such information to help them earn their daily bread by trading, making, and selling. After all, if the much-experienced vice chairman of the Fed, Donald Kohn, can say, “We are uncertain about where the economy has been, where it is now, and where it is going,” I can certainly be forgiven for not adding still another detailed annual forecast to the many already before you. If some take this as an excuse for vagueness, so be it.
We are coming off a 12-month run that can best be described as the tale of two economies–the hot one in the first half of the year (growth at 5.6 percent and 2.6 percent in the first and second quarters), and the cooler one in the last half (2 percent in the third quarter and perhaps about that in the final quarter, although some economists are, with good reasons, predicting a bounce-back to a 2.7 percent rate in the fourth quarter of last year). On average, not bad, but then again a person can drown in a river with an average depth of four feet, which is what some property speculators loaded with Florida condominiums are doing as mortgage payments on unsold and unrented flats come due.
