Skip to content Bloomberg the Company & Its Products The Company & its Products Bloomberg Terminal Demo Request Bloomberg Anywhere Remote Login Bloomberg Anywhere Login Bloomberg Customer Support Customer Support Menu Search Bloomberg Businessweek Sign In Sign Out Subscribe Home Markets Technology Politics Wealth Pursuits Opinion Businessweek New Economy Green CityLab Video Podcasts Radio Newsletters Watchlist Subscribe Sign in Submit a Tip Help Center License Read Bloomberg New Economy Future Finance Wealth Next China Crypto Checkout Hyperdrive Well Spent Prognosis Equality Good Business Billionaires Graphics Sponsored Content Screentime Retirement Center Watch The David Rubenstein Show Art + Technology Inspire GO Special Reports Where to Invest $10,000 50 Companies to Watch in 2018 Where to Invest $1 Million Follow Facebook Twitter Instagram LinkedIn Read Economics Deals The FIX | Fixed Income ETFs FX Factor Investing Markets Magazine Watch Daybreak Surveillance Markets What’d You Miss Real Yield Charting Futures Futures in Focus Follow Twitter Facebook Data Stocks Currencies Commodities Rates & Bonds Sectors Economic Calendar Listen What Goes Up Stephanomics Odd Lots Surveillance P&L Trillions Read Work Shifting Code Wars Startups AI Mobile Big Data Cloud Computing U.S.Global Special Reports The Elon Musk Tracker Tesla Model 3 Tracker Watch Bloomberg Technology TV Studio 1.0 Listen Decrypted Follow Twitter Facebook Read Election 2020 Trump Tracker Global Trade Tracker Listen Sound On Bloomberg Law Watch Balance of Power Subscribe Balance of Power Follow Twitter Facebook Read Investing Living Opinion & Advice Savings & Retirement Taxes Reinvention Watch Good Money Listen The Paycheck Follow Twitter Facebook Instagram Read Travel Autos Homes Living Culture Style Special Reports Property Listings London Property Prices New York Property Prices How to Spend Your Bonus Watch Made Traveler Invitation Only Follow Twitter Facebook Instagram Read Editorials Follow Twitter Facebook Instagram Listen Masters in Business Subscribe Bloomberg Opinion Today Money Stuff Ritholtz’s Reads Early Returns Sparklines Special Reports Sooner Than You Think Business of Equality The Year Ahead: 2020 The Bloomberg 50 Best B-Schools Watch Hello World The Magazine Subscribe Follow Twitter Facebook Instagram Watch New Economy Conversation Series Listen Stephanomics Subscribe Turning Points Follow Twitter Facebook New Economy Forum Read Science & Energy Climate Adaptation Finance Politics Culture & Design Special Reports Data Dash Subscribe Daily newsletter Follow Twitter Facebook Instagram Read Design Culture Transportation Economy Environment Housing Justice Government Subscribe Daily newsletter Follow Twitter Facebook Instagram LinkedIn Watch Live TV US Europe Asia Australia Schedule+Shows Shows Surveillance Daybreak Markets Balance of Power What’d You Miss? Bloomberg Technology All Shows…Series Next Jobs Hello World Storylines Game Changers Profiles Traveler Journey Through South Korea All Series Follow QuickTake YouTube Twitter Facebook Listen What Goes Up Stephanomics Odd Lots Decrypted Masters in Business Surveillance P&L Businessweek The Pay Check Prognosis Travel Genius Works for Me Trillions All Podcasts… All Radio Shows… Economist Jim Paulsen Forecasts a ‘Growth Bomb’ The Leuthold Group CIO says consumers will become more confident and splurge from their savings.
By Peter Coy @petercoy More stories by Peter Coy November 4, 2020, 12:41 PM EST The U.S.economy just came off a pretty good quarter—actually, at an annual rate of 33.1%, the strongest ever in records going back to 1948.Economist Jim Paulsen says there’s more where that came, because consumers have lots of savings and pent-up demand.All that’s needed is an increase in consumer confidence to set off a “growth bomb,” says Paulsen.
“More than $2.5 trillion of sidelined savings is the fuel for a growth bomb waiting to explode,” Paulsen, chief investment strategist for Minneapolis-based Leuthold Group LLC, wrote in a note to clients on Nov.2.
“Additional fuel isn’t needed; the fuse just needs to be lit.”
I followed up with Paulsen by email.
He noted that the median forecast of economists surveyed by Bloomberg is for economic growth of 4.0%, in the current quarter and 3.7%, 3.5%, 3.3%, and 3.2% for the four quarters of 2021, going by the annualized rate of increase in gross domestic product from the preceding quarter.His ballpark estimates for those quarters are a lot higher: 7%, 5%, 8%, 5%, and 5%.
In his email, Paulsen writes that the coronavirus relief measures put in place this year will have a “lagged impact” in 2021, and that vaccines or treatments for Covid-19 will unleash “a lot of pent-up, paused, postponed buying from both consumers and businesses.”
True, Paulsen writes in his client note, the personal savings rate is far below the almost 34% it reached in April (meaning people were saving $1 out of every $3 of after-tax income).But at 14.3% in September, it’s still higher than it’s been 99% of the time since 1946, Paulsen writes.
And here’s the growth kicker: If consumers do up their spending a lot, factories will have to increase production rapidly, because the shelves are almost empty.Paulsen, who likes using all-caps and exclamation marks, writes that “Relative to the level of economic activity, U.S.
inventories are the LEANEST EVER!”
HOW ABOUT THAT?
Peter Coy Bloomberg Businessweek Writer @petercoy Peter Coy is the economics editor for Bloomberg Businessweek and covers a wide range of economic issues.He also holds the position of senior writer.Coy joined the magazine in December 1989 as telecommunications editor, then became technology editor in October 1992 and held that position until joining the economics staff.He came to BusinessWeek from the Associated Press in New York, where he had served as a business news writer since 1985.
Before it’s here, it’s on the Bloomberg Terminal.LEARN MORE Have a confidential news tip?
Get in touch with our reporters..