Economic trends, people to watch in 2009

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As recession and unemployment cloud the outlook for 2009, certain people, trends and companies bear watching as indicators of where the topsy-turvy business world may be heading.
In this time of uncertainty, the spotlight will shine on three economic advisers to President-elect Barack Obama, including University of California, Berkeley's Christina Romer, who has been tapped to head his Council of Economic Advisers.
Romer, an expert on the Great Depression, will share Obama's ear with Larry Summers, named to head his National Economic Council, and Timothy Geithner, the president-elect's nominee for Treasury secretary.
Romer has less political experience than Summers, a former Harvard University president who created controversy by insinuating that women had less aptitude for science than men. Geithner served most recently as president of the New York Federal Reserve Bank, where his actions during the 2008 financial crisis earned mixed reviews. With a global recession expected to linger into 2009, many fortunes will depend on whether these advisers can devise policies to put the economy on the road to recovery.
High on Obama's economic to-do list is a stimulus package that will include big spending on everything from highways to broadband Internet.
Already there are projections of a $1 trillion deficit in an estimated $3.4 trillion federal budget. For now, the United States can finance its debt by selling Treasury notes at low interest rates because investors see these as safe bets in risky times. But with public policy geared toward restoring confidence and reviving private investment, at some point federal borrowing could become a drag on the economy by crowding out business borrowers or possibly boosting the cost of credit.
One trend that will shape the year is the interplay between oil prices and green energy. When speculation and demand drove oil to record highs in 2008, the silver lining was an explosion of investment in renewable sources and energy-conservation technologies.
Now that oil and gas prices have plunged, will green energy recede into the "nice but too costly" category? Ailing Detroit could find that cheaper gas helps sell American cars. But Silicon Valley may suffer if lower fuel costs take the oomph out of green energy startups.
Of course most people will be keeping an eye on their own fortunes -- the security of their jobs, their credit card and 401(k) balances, the cost of food and the trends in home prices and rents.
These are nervous times. The reset switch flipped in September when the sudden collapse of several financial institutions revealed how fat the economy had grown on debt.
Economists now predict that the big picture will start to improve in the second half of 2009, but that unemployment will probably remain high and the job market sluggish until 2010.
And we'll be watching to see if their crystal balls get it right.
(E-mail Tom Abate at tabate(at)sfchronicle.com)

(Distributed by Scripps Howard News Service, www.scrippsnews.com.)
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