Comparing the United States to the children's story The Emperor's New Clothes, Don Reynolds, consulting economist and founder of 21st Century Forecasting, told attendees at the closing general session of the 112th USA Rice Millers' Association Convention that U.S. debt will be ignored until someone points out the country has "no clothes." However, the speaker predicted, "Wall Street will continue to shrug off the weakness in the economy and I predict the Dow will rise to 14,000."
Reynolds noted increasing corporate profits will drive the market, inspiring confidence in investments despite overall weakness in the housing and energy sectors. The "housing market is still in very bad shape and over supply driven by housing foreclosures will mean that some areas will take 12 years to see a housing recovery," Reynolds told attendees.
He added that despite the weakness in the dollar due to high national debt, the dollar is still relatively strong compared to the Euro. Further, he said that true recovery would only come if Congress acts in a meaningful way to control the nation's debt.
Reynolds said rising population and increasing demand for oil would continue to drive commodity prices higher, and while they would eventually decline, the overall trend indicates higher and higher food prices.