Fed's Plosser: Turnaround by 2nd half of 2009

These Fed guys are not as dumb as they look. Charles Plosser, head of the Federal Reserve Bank of Philadelphia, says the U.S. economy could begin to recover in the 2nd half of this year. Though he doesn't expect the unemployment rate to drop any time soon, he doesn't expect it to rise to double digits. Plosser's no poser. He knows business cycles.

Of course, now that more economists are coming around this emerging consensus of a 2nd-quarter rebound...I'm getting worried. Conventional wisdom is often wrong. Among many big wildcards is the possibility of external shocks from the Middle East and any of a number of other hotspots. Fingers crossed.

Speaking of wildcards, in other news, retail sales fell last month at more than double the rate forecasters expected and more than the previous month. The risk of a liquidity trap -- or a vicious deflationary spiral of falling prices, production, sales, jobs and expectations coupled with subsequently rising real (inflation-adjusted) interest rates and expanding real (inflation-adjusted) debt burdens -- can not be ruled out.

I'll be keeping my eye out on independent, market indicators that are not as subject to the fallibility of the conventional wisdom and individual forecasters.