NEW YORK ( TheStreet) - The outlook for GDP growth is better, but hardly exceptional, through the first half of 2011 -- something in the range of 3.3 percent through mid-2011. Inflation will remain below 2.5 percent and unemployment will remain at or above 9 percent into 2012.A sovereign debt meltdown in Europe poses significant downside risks: It could thrust Europe and the United States into a double-dip recession. Baring such a calamity, here is my assessment.
Fourth QuarterCar and truck sales, technology replacements, better retail sales, and stronger exports lifted fourth-quarter growth to about 3.3 percent, perhaps higher. Year over year, fourth-quarter inflation was about 1.2 percent. During the Great Recession, the average age of cars and trucks increased substantially, and private and commercial owners face costly maintenance expenses, making new purchases more cost attractive. Car and truck sales should improve to 12.36 million in the fourth quarter from 11.32 million the first nine months of the year. Personal and business technology sales got a similar boost, though the product mix continued to shift. You can hold in your hand what you carried in your backpack two years ago, and often left at home or in the office five years ago. Retail sales were lifted, somewhat, by a stabilizing job market. Job seekers outside the hot areas -- e.g., technical specialties in finance, information technology and health care -- did not enjoy markedly improved prospects, but the 90 percent of workers holding jobs appear more confident about keeping their jobs. Also, Americans tend to become exhausted with thrift. Although value-oriented stores did better during the holiday season than did middle-range retailers, overall Americans are more confident to use their credit cards.
Fourth-quarter exports got a lift from a weaker dollar against the euro earlier in the year --the export effect of a weaker or stronger dollar occurs with a lag of several months; consequently, the real trade deficit improved in the fourth quarter.