Top Economists and IMF Head See U.S. Consumers Reviving Faster
In fact, households are reducing debt and increasing their savings faster than anticipated, and it's this progress that households are making in repairing their financial positions that will give them more room to spend in the future. "The deleveraging timetable is nearly a year ahead of schedule," Berner told Bloomberg. This will help the U.S. economy avoid a relapse into recession and put it on course for 3% growth next year, he said.
According to recent data, the savings rate was 5.9% in 2009, up from a previous report of 4.2%. A report from American Express (AXP) recently showed a similar trend of more saving.
Several other respected economists, including Robert Doll, vice chairman of BlackRock, also agree with Berner, saying Americans are getting their finances in order, which should be good for retail stocks, Bloomberg reports.
Pessimists Still Foresee Long Retrenchment
Of course, not everybody agrees. New York University economics professor Nouriel "Dr. Doom" Roubini recently predicted 1% to flat growth the rest of the year. And David Rosenberg, chief economist at Gluskin Sheff & Associates in Toronto, who also was among the first economists to predict the recession, said on Bloomberg Radio that the U.S. faces "an extremely anemic economy for some time to come" as households retrench and "work off these debt excesses."
Carmen Reinhart, a professor and director of the Center for International Economics at the University of Maryland in College Park, also thinks -- at least if history is any indication -- that the U.S. may face another seven years of sub-par growth as consumers reduce the debt they built up prior to the recession.
IMF Head Sides With the Optimists
But Berner's optimistic view wasn't the only one Monday morning. While Roubini recently predicted a 40% chance of a double-dip recession, International Monetary Fund Managing Director Dominique Strauss-Kahn, told CNBC a double-dip recession is unlikely.
Strauss-Kahn said stimulus spending had contained the crisis, and that the U.S. has taken the correct approach in dealing with the economic slowdown and making sure the recovery is sustainable.
"[A]s long as they will support [the recovery], finally it will pick up and create jobs," he said. But, the effect won't be immediate and will take at least a quarter or two before we know better.