This post offers Wachovia’s 2009 economic outlook for the US, under editorship of highly rated John Silvia. The report recognizes the extreme challenges that will confront investors and businesses in the year ahead and is aptly titled “When will this horror show come to an end?” A brief excerpt follows below.

“The 2008 economic story could have been written and directed by a Hollywood horror master. Watching the developments in financial markets this year was like squinting through closed fingers during the iconic shower scene in Alfred Hitchcock’s 1960 thriller, ‘Psycho’. You could almost hear the soundtrack of screeching violins during televised financial news, and this time it was your assets that were going down the drain.

“… further declines in consumer spending, business fixed investment spending and residential construction translate into continued contraction in real economic activity. By the time the economy hits bottom in the middle of 2009, real GDP will probably have contracted nearly three percent, the worst downturn since 1981-82. Underlying our forecast is the assumption that policymakers will take the necessary steps to prevent the global financial system from locking up again. Should that assumption prove overly optimistic, global economic growth would end up even weaker than our already bleak outlook projects.

“After the year we just finished, you might feel like covering your eyes rather than looking at what might be lurking ahead. In this outlook, we explore how the unprecedented financial developments of the past year will unfold over the next 12 months. The villains in this horror flick are the credit crunch, poor public policy decisions and diminishing foreign trade. At the risk of spoiling the ending to this movie, the good news is that we are going through some of the scariest parts right now; by the end of 2009, economic growth should return.”

Click the links for the full report or the slideshow (used for the Wachovia conference call).

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