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NPRA: Purchasing Power Key to Recovery

5:26 AM MDT | April 1, 2009 | By LINDSEY BEWLEY

The price of energy and commodities will be crucial to economic recovery, Todd Buchholz, former White House economic policy advisor, told attendees at NPRA’s 34th annual International Petrochemical Conference in San Antonio.

Amid the challenging economic climate, one of the few positive aspects for U.S. consumers is the recent collapse in commodity prices, “because that’s one of the few effective forces for injecting buying power into people’s pockets,” Buchholz said. “It is crucial in terms of economic recovery for the prices of commodities, including energy and oil, to remain at a moderate level.”

Commodities were also a bubble market, Buchholz said. “The housing disaster wouldn’t have happened without a simultaneous commodity bubble. This is why we ended up in a recession.”

Consumer confidence has plummeted and people are re-allocating where they are choosing to spend money, but consumer purchasing power will be the key to getting out of the current downturn, Buchholz said. “The central banks should print more money, lower interest rates, and allow lower prices into the economy to give people more buying power. That is how we will be lifted out of this.”

Buchholz expects the U.S. economy to hit a bottom in the third quarter of 2009 and then rebound in the fourth quarter. “By summer I expect we will hit a bottom, and then by the fall we will probably see some signs of growth.” 













 
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