Tuesday AM December 23rd, 2008

A new USB report projects a further sharp downturn in the global economy in 2009 before things bounce back. Ed Mayberry reports.

image of UBS building in NY

UBS Wealth Management Research says most developed countries, including the United States, will slip further into recession before a mild recovery sets in later in the year.  Mike Ryan with UBS says we’re facing an incredibly challenging macro-environment.

“The recession, which started really at the very beginning of 2008, is likely to stretch until at least the middle of 2009.  It’s going to be little different than prior recessions that we’ve seen.  It’s going to be little bit deeper, it’s going to be a bit longer.  We’re in a process now of seeing a deleveraging of the consumer sector, and that means that the economy’s going to really continue to struggle while we see individuals go through the process of repairing their personal balance sheets.”   

The authors of the report stress the importance of portfolio diversification.  With stocks, the report favors healthcare, telecoms and consumer staples.  Ryan says the report also looks at geopolitics and government policies.

“Now that includes not just monetary policy (in) terms of cutting rates, but also fiscal policy — what types of measurements will we see governments take in order to help stimulate the economy, so the monetary policy side or the fiscal policy side will have an impact either in reducing the severity of the recession or stabilizing financial markets, or both.”

The outlook is intended for wealth management clients of UBS

Ed Mayberry, KUHF Houston Public Radio News.

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