Jim Kunster posted his “Forecast for 2009” on his blog Monday morning. What follows is based on a comment I left in response, with my own predictions. I’ve done some rearranging and expansion on that original comment.
January → March
The year will likely begin with a quiet period, relative to the rest of the year, after the inauguration euphoria. Retailers are declaring bankruptcy (Circuit City, KB Toys) now, so it would be inaccurate to say the implosion starts early next year. But it will start picking up steam. The Obama administration, even with a high initial approval rating, will dribble out bad news slowly to prevent panic.
Most everyone will admit that the auto manufacturers, currently on life support, won’t recover. GM will break up, maybe voluntarily, into three companies: budget/consumer/sport (Chevy/Pontiac), luxury (Buick/Cadillac), trucks/industrial. Auto workers will own a significant portion of the companies, which will help with wage concessions (the best way to bust a union, after all, is to turn the workers into owners). Ford will swallow some of Chrysler, the rest will wither and die. The Japanese companies will scale back their operations. The job losses will ripple through the supply and dealership chains, and outward from there. Herculean rescue efforts will slow but not stop the hemorrhaging.
Some thousands of people will be caught out without converter boxes when the analog broadcast TV signals are turned off in February. There will be much noise made, and much pressure put on the FCC to push out the date. Eventually, the networks and local stations will dish out freebie converter boxes. But some people will find out they really don’t miss TV at all.
April → June
Fox Spew will begin referring to the “Obama depression.”
While mortgage resets continue declining to a summer 2009 minimum, job losses in retail and (later on) auto sectors will lead to increased defaults. The Obama administration will likely enact a law requiring the actual owner of the mortgage to initiate foreclosure, so there will be a mad scramble to figure out just who the heck owns the paper on all those houses.
Republicans will obstruct, spin, and do anything they can to tear own Obama (and the country be damned). Obama and a mob of angry constituents will begin forcibly implanting a spine in congressional Democrats.
July → September
The first steps toward universal healthcare will be taken. We won’t get there immediately, or even quickly.
Rolling blackouts may begin in isolated regions, but they won’t be seen nationwide until around 2012 (see FAR Future #1). A lot of people will leave their A/C off as much as possible to save on electric bills. There may be some spot gasoline/diesel shortages in various regions, like the upper Plains saw last summer (and the Southeast in the fall), based more on refinery or pipeline issues than any kind of crude shortage.
Through the summer, some dozens of unemployed bloggers will take cross-country road trips, talking to people and photographing the economic devastation. They will travel by various means, including hitchhiking or just hiking, and eat from government-supplied food pantries (below). One of them will break through to a book deal, and be hailed as “the 21st century Kerouac.”
Mortgage resets bottom out and begin the next wave in late summer. A foreclosure moratorium will be imposed, probably 60 or 90 days, followed by tax incentives for surviving banks who voluntarily refrain from foreclosing (with partial success). Squatting in abandoned houses will be widespread, but most squatters will keep up the properties they occupy and nobody will worry much about it. There will naturally be a few druggies and bangers taking over abandoned houses, and they’ll get all the media attention.
The government will either buy or seize food stocks in response to reports of small pockets of hunger/starvation. Agribusiness will take a big hit, and perhaps be nationalized to prevent an ongoing food crisis. The “victory garden” concept will make a comeback, under a new name like “food security garden,” and people will be attending classes and gathering information and tools for spring planting.
October → December
Argentines will begin consulting with unemployed American laborers, explaining how they took over shuttered factories and began producing things of value. It will mostly stay under the media radar in 2009, though.
There will be a mad scramble to ensure people have enough heat to survive the winter. Some low-income northerners may be relocated south and installed in otherwise abandoned dwellings for the winter, triggering howls of outrage from right wing locals.
General Economic trends
Inflation? Fuhgeddabotit. Whatever money is printed to keep the economy afloat will follow the old money right down the rathole. There’s just too much money evaporating in the finance sector to worry about inflation. The only way inflation will be an issue in 2009 is if Obama declares it a Jubilee Year and wipes out all debts, public and private, with the stroke of a pen. That would free up all the money going to service debts for buying stuff — and is about as likely as commercial fusion power being deployed next year.
Part & parcel with (lack of) inflation will be a more stable oil price regime, compared to 2008. OPEC will continue to chase demand down the price curve; whether they actually catch up is the question. Cash-strapped producer nations might tell OPEC to go pound sand (not oil sand though) and keep pumping. Leaving out so-called Black Swan events, as the 800-pound consumer gorilla (the US) continues to lose weight, oil prices might fluctuate between $40 & $80/bbl (you may remember me saying we’d probably never see oil under $100/bbl though, so add salt as needed). Spot shortages will have external causes such as refinery fires.
Mortgage rate resets, according to a couple graphs I found online, will be less widespread in 2009 than in 2008. Last year was the year for major sub-prime resets; 2010 will see the Alt-A and Option ARM resets balloon though, and mostly keep climbing until autumn 2011, dropping off precipitously by summer 2012.
Given the current lower demand for oil, new sources won’t be developed and the more exotic sources (tar sands, deep water) will be too expensive to continue producing. Production cuts are currently aimed at a stable market; in the next couple of years it will shift to an economic base (i.e. uneconomical to increase production) then hit physical constraints (the whole point of peak oil). The initial parts of FAR Future are merely extrapolating current trends a few years ahead.