In the New York Times yesterday, financial columnist Gretchen Morgenson checked in with an economist named Ian Shepherdson, who was predicting a housing collapse to be followed by a recession way back in 2005. That kind of foresight deserves a lot of respect, so what does Shepherdson see on the horizon now? Economic growth.
The key, as Shepherdson sees it, is the amount of credit available to businesses. At this time last year, the total amount of commercial and industrial bank credit was at $1.32 trillion, and shrinking by $7 billion a week. It finally bottomed out this past June. Now that amount of credit has started building again, although very slowly.
The upshot of all that credit available for business expansion is growth, particularly among small businesses, although not exceptionally strong growth. Shepherdson predicts GDP growth staying at its current rate of around 2 percent for a while. By the second half of 2011, he says, we may be up to about 3 to 4 percent. At this point, that might be the best we can hope for.
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