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On March 15, Federal Reserve Chairman Ben Bernanke appeared on “60 Minutes,” a rare occurrence for a sitting Fed chief. During the chat, Bernanke predicted an economic recovery next year, which led to the question on GlobeSt.com’s weekly poll in which readers were asked whether “The Guy is Out to Lunch,” or “He’s Right. We’ll hit bottom in ’09.” The results were overwhelming in favor of the latter opinion–62% agree with the Fed Chairman, while 38% disagree. Robert Bach, Chicago-based senior vice president and chief economist at Grubb & Ellis, concurs with Bernanke’s forecast.

I think he’s correct and most mainstream economic forecasts that I’ve looked at suggest that we could see positive GDP growth as early as the fourth quarter, although it would be pretty tepid growth. This would most likely not be a robust recovery.

Maybe in the fourth quarter we might see some tepid growth. Up until recently, some forecasters were saying the third quarter, but that seems a bit aggressive to me. But I would be very pleased and not too surprised if we saw modest GDP growth in the fourth quarter, and then I would be surprised if we didn’t see positive growth in the first or second quarter of next year. But the thing to remember is that the labor market trails the recovery, and if it’s not a robust recovery it’s likely that the unemployment rate could keep rising well into next year. So just because we see positive GDP growth doesn’t mean that our troubles are over. Commercial real estate tends to lag the labor market so we will be one of the last industries to come out of it.

When you start attracting private capital into these assets I think that is a good indicator that the credit markets are beginning to function again, and the process of getting these assets off the bank balance sheets and into the hands of private investors has begun. So that would be very encouraging. You could say the stock market is the leading indicator by six months, but that is just so unreliable. It’s all over the place. In commercial real estate, when sublease space peaks, or even when the rate of increase begins to cool off, that would be a hopeful sign.

You have to monitor the flow of the data very carefully. New data comes out every week. I looked at economic forecasts by Bank of America, Goldman Sachs and PNC beginning last August and September, and every month it seemed like they revised their forecasts lower. The purpose of astrology is to make economic forecasting look good. You have to look at the flow of data and act accordingly.

I would think the risks would continue to be to the downside. In other words, the recovery would be more likely to be delayed than to be moved up based on the timeframe we just talked about. Because the news is pretty grim out there I think. We did have a bit of good news last week, but it seemed like it wasn’t much to hang your hat on, welcome as it was. The stock market went up and we’ve seen two positive months for core retail sales, which is a hopeful sign. That would suggest that consumers will indeed go for a bargain when they see one.

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