Investors around the globe should brace themselves for a bumpy ride for the remainder of the year; but there is no need to adopt the crash position as the world's biggest economy adjusts to slower growth.
This is the consensus emerging among analysts as this edition of Net Worth went to print, with most agreeing that market jitters would continue as the subprime credit crisis unfolds and data points to a stuttering economic performance, but there will be no 'hard landing' or recession for the United States economy.
In its Global Weekly Economic Monitor published this month, US investment bank Lehman Brothers warns clients that signals from the US economy are difficult to read and leaves the outlook 'as uncertain as it gets'. Nonetheless analyst Ethan Harris ventures the following likely events:
a deepening credit crunch will likely keep GDP growth below trend, with risks to the downside;
dwindling mortgage credit availability should weaken home sales further, prolonging the housing recession;
consumer spending will slow in response to declining housing wealth and tighter credit conditions (see chart overleaf); and
