A Review of the Outlook for 2010

Around this time of year, many people give their outlook for the coming year. In my blog post Outlook for 2010 I made several predictions. All but one of the forecast items proved true:

We can expect the Federal Reserve to leave rates low until the job market turns the corner.

The overnight rate stayed between 0 and 1/4% for the entire year.

Increases in government spending at the federal level will be partially offset by cuts in local and state government budgets.

State and local governments were definitely in cut mode. The federal government spending was huge as the stimulus money was spent in many areas. Here in Northern Virginia, we see the new Metro link from Tysons Corner to Dulles Airport project dominating the landscape.

Somewhere in the later half of 2010, I expect the job market to reverse course as employers slowly start adding people to their payrolls.

Unemployment remained stubbornly high with no relief the entire year.

Stocks should continue the up and down motion as the Dow Jones seeks higher ground.

Wall Street is in the green for 2010. All key indexes are up for the year and we are currently enjoying a year end rally.

Any increase in consumer confidence will translate into profit since companies have reigned in their fixed costs. Will restaurants start filling their dining rooms mid-week?

Despite lots of restaurants seeking Chapter 11 bankruptcy protection early in the year, the industry is flat to up and creditors are allowing most reorganization plans to gain approval.

Look to travel indicators for signs of increased mid-week business. When airlines and hotels begin to see increased volumes, restaurants will find business travelers in their seats. Don't expect many $100 bottles of wine on business expense accounts this year. Frugal is in vogue.

Hotel occupancy rates have improved and the year end party news from downtown Manhattan had a frugal flavor.

I expect oil to remain below $100 per barrel.

I'm still accurate with this prediction but the markets are unseasonably high as 2010 comes to a close.

Overall, 2010 will be better than 2009 as the long slow recovery takes root.

Overall, 2010 was a big improvement over 2009 for most Americans. The big group experiencing persistent unemployment is a notable exception.