Jerry Idaszak, Associate Editor of the Kiplinger Letter, discusses the Economy

Well that's the question everybody's minds. Left to its kind of internal momentum we think you would pick up a little bit of speed but that'll in other words if it's growing around. 2% to remove it more in the first half it might -- Around two and a half percent in the second half. But the a couple of concerns the chief concern is what's gonna happen with the eurozone. And that's weighing down quite a bit there's some positive. Let's eat if the Euro zone on lines what was that do the European GDP knock it down you know if Greece leaves in it seems like they're on the verge of recession now right there you GDP grown at point 1%. Yeah it would they've that your the we think European zone -- of Greece Italy will probably slide into recession. If we priestly. The questions arise about we'll. Credit markets and worst pain. And how much pressure -- Spain and Italy. And the problem in the assessing what the damage might be is that no one's quite sure who rules how much debt. And everybody hearkens back to 2008 when Lehman Brothers. Went under in the year Treasury Department. For the US decided to let go. And then everybody discovered that there are a lot of money market funds at Lehman Brothers commercial paper and that this insurance. Crisis started who have sampled and that's what concerns in Europe. I would do it -- are treating your right your newsletter and I saw that you're projecting that the ten year treasury note yield will be two and a half percent. By the end of the year but I look at it this morning in rowly won 75. Weary coming up with that number that seems like a very rapid rise. In interest rates in a short period time -- 75 basis points in six months seven months. Well if you look at the beginning of march when in the academy look. Good and Euro Europe appear to be on its way toward. -- in it is settling it's the situation down a bit. The ten year treasury went from and around one point 95%. To 2.3 8%. In the manner of a few days. So you had. 33 basis point increase in here in the last week. Based on the view that the US economy is strengthening and there would be pressure. The pressure on wages ultimately prices -- wages go up. So that's where we he had it we didn't put there. It's a total war he's still. Feel that -- with the problems in Europe that we're gonna get to pick that would. Well now the problem is apparently getting worse because the central banks and others in Europe are buying treasuries as a safe statement. -- -- So if if things settle down and the US economy in this sort of the beginning catalyst too its own momentum grows. People assert -- focus. Inflation possibilities in 2013. If if Europe continues as it looked gloomy. You're gonna get you your -- to get the 2.5 percent by year and. Jerry you you had a price target I believe on oil of about 9192. I've been reading reports that he goes low 75 if this thing gets you know if if you because we had stockpiles that are very high -- that stockpiles I think at a 22 year high. In terms of oil inventory letter levels here domestically in the United States. Are you sticking by your 92 dollar prediction for oil prices. Well we have an energy. A tally of mine covers energy and so we get the energy -- -- from him. And yes I mean is the current week you still looking it something in the low ninety's that -- surge put fanatic collapsed. That's. Gasoline prices continue to conduct and that certainly. That if this -- the US economy consumer spending and inflation. Yeah it's like a tax cut as you know immediately -- when you get tax -- gas down. A -- a pain maybe 35360. Gallon now for gas and they'll always. I just think if they go if it goes to 75 dollars a barrel we can have -- we can be buying gas with a two inference. Well we don't think it's probably gonna get to that point but he could but what I want it is Ed that we need normal summer. We warm winter which. Ken -- bills down. And the gas price decline is to further help consumers spending. Did we get this summer that summer words air conditioning cooling bills skyrocket. That's gonna help. Right that's true. Unemployment the the eight I believe you said in your report that you thought unemployment would be 8% by the end of the year which effectively means is not gonna move a whole heck of a lot between. Now and year end. Oh what why the anemic and I don't disagree with you but why has the decline in our rate of unemployment. -- -- It just so pathetic is Kristy Lee who do you look at I I studied the the Reagan era recovery pretty regularly and look at how -- rapidly unemployment dropped then. And a compare to now and and it just doesn't it the the charts don't line up at all. Well there's a couple of it's it's interesting you bring. In the Reagan era in the eighties when we came -- from very serious recession in the early eighties. Interest rates were -- go on the prime -- going up to 21%. And now of course is around 3-D recorders and training camp. And then when their recovery started at the -- started to cut interest rates and construction took off. And employment that people picked reproduction. Took a lot slower rate. In this current climate. The Fed can't cut rates any further than it did. Construction is suffers still suffers from overbuilding. And so you don't -- the rebound where you can cut interest rates since they'll listen to trigger a housing grew. Housing still recovering from a -- And they lost to ensure construction jobs you're I think we're still down to millions something like yup. And it's a chief reason why we haven't seen isn't it wasn't classic recession. And it's not a classic recovery. Jerry do you think though that perhaps too much of the pressure has been placed on the Federal Reserve and not enough on our political leaders dvd think. President Obama today is wishing that he had done more in the early years of his administration to work on the economy. Well I think is advisors. Said it would be hard to get more of a stimulus plan but without looking at the stimulus. The concern that we have in terms of congress and the White House's. What's what's being described as a fiscal cliff. The tax cuts the bush era tax cuts expire at the end of this year. Automatic across the board spending cuts are due to take place take expect January 1. The payroll tax cutters do expire at the end of the year you you know and play is that where I'm getting at is if all that happens. We're in a recession in 2013. And they're subtle look forward to a. Yeah markets the markets at this point think that congress will. And it was sobriety and reach some kind of compromise. I eight I HI VP well as well and I I are all politicians are. Not batting competent I would hope. Well that's a good optimistic note that the sound. Jerry thanks very much for your time very sure appreciate it. We can that's Jerry out is that he's the associate editor at the Kipling or newsletter and at -- You want a good source of financial and economic data that's a good place to get a that's your -- he tends to be nonpolitical to which I appreciate him.