V-Shaped Dreams Evaporate

Nouriel RoubiniBy Nouriel Roubini, Christian Menegatti and Prajakta Bhide – All the tailwinds of H1 will become headwinds in H2. As state and local governments keep retrenching and even the federal stimulus diminishes, the fiscal stimulus will turn into a fiscal drag that will be much more pronounced in 2011 and after some of the 2001-03 tax cuts expire. The base effects from the lousy economic activity figures of 2009 are gone, temporary census hiring finished and tax incentives–cash for clunkers, the investment tax credit, the first-time home buyer tax credit and cash for green appliances–all expired after “stealing” demand and growth from the future. more> http://tinyurl.com/28bmp3f

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