Economics students share forecasts for the year ahead

After two years of economic pain — the deepest, longest downturn in six decades — trade may hold one key this year to real improvement, said Andrew, a McIntosh High School senior.

“Exports should increase with a declining dollar and that will make our goods cheaper overseas and create jobs for people here,” he said. “And I do expect the dollar to get weaker.”

Andrew is one of 25 seniors at the Peachtree City school halfway through an Advanced Placement course in macroeconomics taught by Janet Hansen. Hansen graciously permitted an AJC reporter to ask the class for an economic forecast to compare with those of four professionals.

The class tossed around terms like “multiplier effect,” invoked names like John Maynard Keynes and worried about the debt-to-GDP ratio. They were polite enough to raise their hands, confident enough to take a stand on everything from the impact of health-care reform to the economics of decriminalizing marijuana.

And they disagreed. Roughly half the class said 2010 would be a year of job growth. The rest said no. Votes were taken, compromises were struck and a forecast was shaped: tempered optimism.

But with concern about recent expansion fueled by federal stimulus spending, there was a pessimistic minority report.

“If you take away government’s contribution, I think that GDP growth will stay around zero or even go down,” said Cody Mahaffey.

“That spending has a multiplier effect — it increases aggregate demand. It increases GDP.”

That demand is caught in a kind of vicious cycle, said Nick Marette.

“I think unemployment will probably keep rising and that will just leave people with less money and that means less spending on consumer goods. Right now, banks aren’t lending out money. That means that people can’t start businesses.”

Efforts by the Federal Reserve to spur the economy with low interest rates are likely to continue all year, argued Morgan Wright.

“I think that the Fed will be too worried about the economy to raise the rate. If the economy is so weak, they won’t want to take a chance.”

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