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The Griggs & San tow Weekly Report Monday, February 9, 2009 295 Madison Avenue-#1130 Telephone: (212) 867-6111 ',New York, N.Y. 10017 E-mail: griggs(a,nyct.net —Editorial- We have developed a new adage for the President—"too many economic advisors can spoil the broth." This could well be the case in the new administration. An economist who is intellectually bright is nice; an economist who has common sense and street smarts, along with being intellectually bright, is better. In the case at hand, there appears to be a growing rift between Paul Volcker and Larry Summers with re- spect to influence and power. Given the personalities of both these individuals, this conflict should have been realized before the appointments were made, and needs to be resolved before economic damage is done. All we can say at this point is that if the President were to have only one economic adviser, it should be Paul Volcker— hands down. Monday—February 9th: No releases. Tuesday—February 10`R: No releases. Wednesday—February nth: Foreign trade deficit(Dec)—From July to November 2008, the monthly foreign trade deficit dropped •harplY from -$61.1 billion to -$40.4 billion. This would be great news if it continues, but will probably not be the case. Both exports and imports are likely to move lower in December, but by a considerably smaller amount than in recent months. We expect the December deficit to be between-$38 billion and -$40 billion. If that is the case, then the trade deficit for all of 2008 will be about-$670 billion which compares with-$700 billion in 2007. Yet, the annual numbers are misleading when forecasting the 2009 trade deficit, because in the first half of 2008, the deficit was -$357 billion, while in the second half it is likely to be only about-$313 billion, with the last two months of the year smaller by far. The bottom line is that the 2009 trade deficit is likely to be in the vicinity of-$500 billion, and it could be even less. From an economic growth point of view, the smaller trade deficit is a plus from a real-GDP point of view. Treasury budget statement(Jan) —The most important part of this release is not the budget deficit for January, but rather the tax receipts. In January 2008, tax receipts were $255 billion, and we expect the January 2009 number to be between $220 billion and$225 billion—a reduction of about 12 percent or 13 percent. Importantly, January is the month where receipts are dominated by estimated individual income tax payments. This does not send positive signals for the budget outlook. On the spending side for Janu- ary 2009, outlays appear to have been in the area of$305 billion or$310 billion. If that is the case, then the deficit for the month was probably about -$90 billion. As a matter of more than passing interest, there was a surplus of$18 billion in January 2008. Thursday—February 12th: Initial unemployment claims (Feb 7t)—Last week, initial unemployment claims jumped to 626,000. We would not be surprised, however, if a somewhat smaller number is reported for the week ending Feb- Ortstary 7th—such as between 600,000 and 620,000. Remember, however, that the trend of initial claims is lill higher.