A Pessimistic Economic Prediction

I warned last month about the potential for a significant correction in the stock market. More recently, I noted that though there are signs that credit markets are recovering, I agree with the majority of economists who see slow growth ahead for the U.S. economy.

But apparently I'm a bit of an optimist.

In a poll Tuesday, we asked readers to read the tea leaves and give their thoughts on the near-term future for the U.S. economy. Only 7% of the nearly 3,000 votes counted said that growth would pick back up and corporate profits would jump. The majority of the votes (51%) came in on the same side as me and expect recovery ahead, but see only slow growth.

An astounding 42% of respondents put two thumbs down on the economy and said to forget slow growth and be ready for a continuation of what's already been the longest recession since the Great Depression. (Check out the full results of the poll here.)

More color please
Here are a few reader comments backing up the dour views.

Plange01 weighed in with:

recovery? have we entered dreamworld? the US is in a depression with over 20% of the workforce already unemployed..there is no recovery not a sign.at this point the only thing to watch is jobs.unless we see some real positive signs there soon its going to be game over for the US.the country is in far worse trouble now than it was a year ago...

LessGovernment had a laundry list of reasons why recovery will be stunted, but began with:

Recovery? Yeah right.

Nearly 10 % unemployment - nearly 20 % if you count those with part time work that want full time work and those that are under employed just trying to get by.

We are in the process of losing our automotive business.

We have 12 trillion currently in national debt up from 9 trillion in 2007 and going to 21 trillion in ten years. The interest on this debt will confiscate half our current total federal budget when we get to the 21 trillion frequent debtor award level. ...

And 7footmoose focused on U.S. consumers, saying:

when an economy is 70% dependent upon consumer spending and the consumer is walking around with his hands in his pockets, paying down record amounts on existing debt and virtually unable to obtain any additional debt while fearing for his job or looking for a job because he's already unemployed and thinking if I can get through this I'll never ever be able to retire because of increasing taxes potentially skyrocketing inflation rates in the future and the fact that my retirement plan has been terminated, my employer 401k match discontinued and my investments are down 40% from their peak, sure the recession is over but only in the theoretical world of the economists

Sticking to my guns
There are certainly a lot of problems facing the U.S. economy. AIG (NYSE:AIG), Fannie Mae (NYSE:FNM), Freddie Mac (NYSE:FRE), and Citigroup (NYSE:C) have all received huge amounts of government money but remain big question marks. In the past I've noted my belief that the government will do whatever it takes to make sure these institutions stay on their feet, but that doesn't mean that the road ahead is going to be full of gumdrops and lollipops.

And if the auto industry can serve as a representative for the rest of the U.S. manufacturing sector, I can't help but grimace there as well. Ford (NYSE:F) may be keeping its head above water, but the recently bankrupt GM and Chrysler only avoided complete meltdown because of a helping hand from Uncle Sam.

7footmoose is hardly off the market either with comments about consumers. Private consumption does drive a huge portion of our economy and consumer debt levels and unemployment make me queasy when it comes to consumer-driven businesses like Apple (NASDAQ:AAPL) and Best Buy (NASDAQ:BBY).

But I also believe that the U.S. economy is more robust than many people are giving it credit for. Within consumer spending alone, it's important to note that spending on things like TVs, furniture, and clothing make up a relatively small percentage of the trillions that consumers spend. Food, housing, medical expenses, and household operation -- which includes furniture, but also includes larger expenses like utilities -- make up more than 60% of total spending and should backstop a collapse in consumer spending.

Deleveraging the economy is a daunting challenge, but I'm not convinced that we won't see deleveraging happen in the context of moderate economic growth.

So?
So have readers been too pessimistic? Scroll down to the comments section below and share your thoughts on the prospects for economic recovery.

If you're hungering for more on the economy, I assessed the performance of Bernanke, Paulson, and Geithner one year after last fall's meltdown.