Al's Magic 8-Ball Forecast by Al Lewis

Time for my annual economic forecast, which readers may recall, is something I do with my Magic 8-Ball, made in China by Mattel.

In last year's forecast, published Jan. 2, 2011, this cheap, plastic oracle beat out most economists.

It predicted oil would rise above $100, that gold would spike above $1,700, that high unemployment wouldn't significantly subside, that the housing crisis would rage on, that lawmakers wouldn't curb the nation's debt addiction, that stocks wouldn't return to pre-bust highs despite all the cheerleading to the contrary and that all of the optimism about a meaningful recovery was misplaced.

This sounds like a no-brainer now, but it wasn't at the time. The 8-Ball's prognostications stood in stark contrast to luminary economists. Mark Zandi, chief economist at Moody's Analytics: "I think we will have a self-sustaining economic expansion in 2011." Lynn Reaser of the National Association for Business Economics: "People will finally recognize that an economic recovery is under way. This won't be a recovery seen only by economists."

Despite accurately calling for more malaise, my little black globe stopped short of predicting a global economic collapse in 2011. Let's see what it says about 2012.

Q: The Mayan calendar predicts the world will end on Dec. 21, 2012. Is it correct?
A: "My sources say no." (I swear, if the 8-Ball is wrong about this, I'm taking it back to Wal-Mart.)

Q: Phew! What about a recession in Europe?
A: "Yes -- definitely."

Q: What about a partial breakup of the euro zone?
A: "Yes -- definitely."

Q: Will this mean an officially recorded recession for the U.S.?
A: "Maybe."

Q: Some say the European downturn will mean more investors flocking to the U.S. for safety, creating a new dawn for our economy and equity markets. Is this possible?
A: "As I see it, yes."

Q: But can it last?
A: "Very doubtful."

Q: So it's going to be a false dawn?
A: "Yes."

Q: In 2011, Standard & Poor's downgraded the U.S. like a cheap Internet stock, and yet to everyone's surprise interest rates actually went down. Will we see more downgrades in 2012?
A: "Signs point to yes."

Q: The stock market just loves these historically low interest rates. Will the Dow Jones Industrial Average return to its highs above 14000?
A: "Outlook not so good."

Q: This $100 oil is crimping the economy. Do we have to worry about it spiking over $150 in 2012?
A: "My reply is no."

Q: Gold surpassed $1,900 in 2011 and is now about $1,600. Will gold prices finally spike above $2,000 in 2012?
A: "It is certain."

Q: Will lawmakers finally put a stop to our runaway deficit spending?
A: "No."

Q: Can President Obama be re-elected in this mess?
A: "It is decidedly so."

Q: Really?
A: "You may rely on it."

Q: Because his challengers inspire even less confidence?
A: "Without a doubt."

Q: So what about the global economic collapse? You know, debt crises and recessions turning into currency crises and a depression. Everybody owing everyone, but no one with money to pay. Is that going to happen in 2012?
A: "Cannot predict now."

Q: Come on. This is the most important question.
A: "Concentrate and ask again."

Q: Are you just afraid I might panic or something?
A: "Better not tell you now."

I'm Linda Miller, a Smart Loan Lady and Your Preferred Utah Mortgage Advisor
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Copied from the Wall Street Journal, this article by Al Lewis, a columnist for the Dow Jones Newswire in Denver might be on to something. Here is the original article.