2010, what will you be?

HAPPY NEW YEAR!
I believe it will be a year filled with opportunity. I believe it will be a year of recovery. I believe it will be a year of backlash. I don’t believe it will be a smooth year by any means. It will be bumpy.
Many of the positive events of the 4th quarter could be overshadowed in the first and second quarters. The housing market is still a major issue. Banking is still an issue. Lending will remain soft (the most recent Treasury sales were covered fourfold suggesting that banks are still risk averse). With risk comes reward. So bank earnings are likely to lag as they continue to eat toxic assets. One day, the survivors will have potentially explosive earnings. Who they will be and when that will happen is still questionable.
Unemployment will remain high for the foreseeable future. That will keep consumer spending from being a powerful tool for recovery as has happened previously. That will cause the recovery to lag as well.
Jobs, as they return will require better education. The bulk of the jobs will be in growth areas, no surprise there, but the growth areas almost unanimously require education beyond high school. This, for many people AND employers, is a large problem. Although the predictions are that the slow decline in unemployment will keep any pressure on wage growth to a minimum, I submit that there will be a lot of wage growth in the areas most under served. A bidding war for talented qualified people could easily develop and while probably not large enough o affect the overall numbers by much, it could be geographically significant AND significant to you if you are in those fields.
I expect that 2010 will post some gains by year end, but the road from here to there will be anything but direct, straight and smooth. The interim elections in November could have a significant affect in the performance of 2011. Congress must begin to rein in the deficits. The November election could be a “It’s the economy, stupid” replay. Once the single party supermajority is broken, little will happen as each side struggles to prevent the other from achieving anything meaningful. Think of the mid-term election as a mid-term grade report on both Congress and the Whitehouse. So far, they seem to be scoring poorly, but November is a long time away.