Economy Watch: When I made my list of 10 Potential Surprises on December 24, I didn’t expect one to come true so fast. Potential Surprise #5 has come to pass. The Fed Funds rate is now at 3%, with the potential to go a bit further to the down side. Another of my surprises is looking promising – #10, that John McCain would be the Republican nominee.
Another now looks like it will certainly not come true, #9, that John Edwards would be the Democratic nominee. As I said in my December 5th essay, Assessing the Presidential Race, I thought John Edwards was the best general election candidate. I probably overestimated how good Mike Huckabee would have been, but I stand by my analysis that John McCain is a better general election candidate than Hillary Clinton. I acknowledge that the tide is swelling Democratic big-time this year. For that reason, I don’t guarantee that McCain would beat Clinton, but I do think he’s the best shot the Republicans have this year.
I stand by, with trepidation, my prediction that the economy will avoid recession this year.