Knowledge@W.P. Carey: US National Forecast 2010: Wall Street Will Do Well; Main Street Will Struggle

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Anthony Chan is a cautious optimist. He is optimistic that the equity markets will continue to improve in 2010. But he's cautious, too -- because the same level of improvement won't be felt on Main Street. The tepid nature of this recovery, Chan said, owes in large part to far-lower consumer spending than is typical in economic recoveries. Chan expects to see "consumer spending contribute no more than half or less its historical contribution towards overall real GDP growth." And that, he said, is because of record-high unemployment, credit markets that are "still constrained," and a massive loss of household wealth.Plus, "consumers took a big hit in wealth, which fell $14 trillion from the peak to the bottom of the financial market collapse. It has recovered some, but consumers were still probably $8 trillion in the red in the third quarter," he said. That's significant, Chan said, because American consumers used rising asset values to substitute for real savings. Now, in order to save, they have to spend less.