Economic Forecasting: A Foggier View Than Ever

Predicting how fast a person will be jogging two years hence is tricky, especially when that person is currently flat on his back in a hospital's intensive-care unit. Nonetheless, Wall Street prognosticators are expected to have at least two years of growth estimates for the economy.

Securities analysts must also work up two years of earnings estimates for the companies they follow. That's never an easy task, even for a single company, but massive stimulus spending is making the job even tougher this year.

"We typically have some sort of stimulus coming out of a recession," says Maury Harris, chief U.S. economist at UBS, who has yet to finalize his 2011 economic estimates. "What makes it harder than usual is that the stimulus was so much larger than usual."

Much of the debate about how well the economy will do post-stimulus has to do with the health of the U.S. consumer. Some economists believe that consumers, after not spending much in 2009 and 2010, will open their wallets widely in 2011 – and all that pent-up demand will give a big boost to the economy.

Others believe that two years of saving won't be enough to cure a decade or more of overspending. And with the consumer still focused on paying down debt, economic growth will be slow at best.

Read more at Time.com…