WUVL - The Shape of Our Upcoming Recovery

W
NYU Economics Professor Dr. Nouriel Roubini, sometimes called "Dr. Doom" for his less than rosy economics predictions, says the US recovery from its current recession will be in the shape of a W. W's, for those who are sharpening up their penmanship skills in preparation for the oncoming Fall semester, go down, up, down, up. He says he thinks we'll have a "double dipper" recession. Did I mention he made his reputation as a gloomy guy? His current fear is that the weary consumer will fail come to the rescue after the effects of government spending start to pull us out of the recession, and back we'll fall. He, by the way, is a professor of economics at the Stern School of Business. Every adjective associated with this guy seems to be depressing, but I guess there's something to be said for consistency.
U
Others, less gloomy but none too optimistic, say that this recession will resemble a U. Down we'll fall, and stay at an elongated bottom, then, finally, we'll move up. This elongated bottom will be caused by extended unemployment and cautious spending. After an extended period where inventories are sold off, housing prices bottom, and liquidity is restored to the banking system, we will then turn the economic corner after the last optimist has thrown in her towel.
V
The V proponents are the rosy predictors, who say the economy has hit bottom and is due to bounce right back up again. Those who are out of work tend to disagree with these rosy predictions. The V's cheerily respond by saying that the beginning of such a recovery is "jobless," to which the jobless respond with expletives which have been deleted for purposes of keeping this discussion family-friendly.
L
Then, rivaling Dr. Roubini for the doomsday scenario, is the L shaped recovery. I don't actually understand how this is a recovery at all, as it illustrates falling, then moving sideways. I suppose that one could argue that the fact that it doesn't fall forever would account for some degree of positivity. The L's argue that we have a "new normal" that is slower growth, higher joblessness, a lengthy period of stagnant prices and other depressing economic predictions. L's are not fun at parties.
Numbers - Not Letters
I've chosen to describe the recovery without the use of an illustrative letter. My experience with economics presents a problem that causes me to avoid using neat lines to illustrate anything. Economics is messy.
GDP
One often overlooked fact in the current GDP projections is our international trading trends. From 1950 to 1980, Gross Domestic Product averaged almost 4%. From 1980 to now, it has been almost 3%.
Source: Bureau of Economic Analysis
Trade and the Weakening Dollar
Economist Jim Paulson of Wells Capital Management in Minneapolis points out that trade deficits, i.e., the excess of imports to exports, fueled by the US consumer since the 1980's has enriched emerging nations, who provided our voratious consumerism with relatively cheap imports during that period.
Now that we are cutting back and repaying our debt, demand from those newly rich emerging markets is likely to increase the amount we export, just as our demand decreases. Further, our "strong dollar policy" in the recent past made our exports more expensive to emerging markets. Now, our dollar's weakened position as we lower rates to fuel our economic recovery, will make our exports even cheaper for those newly rich markets.
Economist Edward Yardeni of Yardini Research agrees with Paulsen, noting that, as of May 2009, "US exports of goods and services had actually risen by $1.9 billion from the previous month. . . while US imports continued to slide."
Source: Barron's Magazine, July 20, 2009
So, conceding that the weary US consumer is unlikely to once again come to the rescue of the US economy, there is legitimate reason to see light at the end of the tunnel. The shape of things to come?
Perhaps not a WUVL, but an unexpected increase in a rarely followed sector of the economy - exports, from an unexpected consumer group - emerging countries. The sky may actually not be falling, and those who predict a "new normal" of GDP growth in the 1% - 2% range, may have overlooked a piece of economic data that could increase their predictions from 33% - 50%, and even better, silence the WUVL's and those who join them in using letters to describe economics.
Pardon me for sounding like a dinosaur, but economics is made up of numbers - not letters.