Howard Davidowitz: U.S. Economy "Is a Complete Disaster"

Howard Davidowitz: U.S. Economy "Is a Complete Disaster"
Posted Jul 01, 2010 10:56am EDT by Keegan Bales in Newsmakers, Recession

The U.S. economy is in shambles and Americans will continue to see high unemployment and lower living standards in the years to come, Howard Davidowitz tells Henry and Aaron in the accompanying clip.

Davidowitz lays much of the blame for the economy's woes at the feet of the Obama administration, which he calls "the worst of my lifetime."

Obama "Mr. Mass Destruction"

Davidowitz says that the key to Obama's success is his ability to sell his policies to the public. He can confidently read from a teleprompter and appear competent and in control, when in reality, "it's one big bag of empty words," Davidowitz says of Obama's messages.

Davidowitz contends that the President's spending, including the health-care bill, is creating massive deficits that will take the U.S. years to dig itself out of. "He is Mr. Mass Destruction," Davidowitz says of Obama. "I mean he is a human destroyer. This guy has spent his way into oblivion and we don't have a budget. He is surrounded by a bunch of complete incompetents, led by himself. "

Housing Gloom

As far as the actual economy goes, Davidowitz's chief concern is the strained state of the housing market, from which the bad news continues to pour in. According to Davidowitz, Americans are facing an $8 trillion negative wealth effect from the bursting of the housing bubble.

"We're talking about some serious money here," Davidowitz exclaims. "I mean this is a complete disaster and that's why we are going to have a double dip. We're guaranteed a double dip in housing."

Small Businesses and Unemployment

Davidowitz says that the job market is also in ruins, noting for every new job there are six applicants. As a result of the intense competition for positions, employers can offer lower wages. Young people entering the work force today can expect to make less money in their lifetime than previous generations.

Considering the majority of new jobs are created by small businesses, Davidowitz argues that new regulations governing loans to small businesses are only making matters worse -- both for the entrepreneurs and the millions of people out of work.

"We have this insane new regulation," Davidowitz says. "Community banks will not even be able to fill out the forms. They'll pack up and quit. They're already underwater. Commercial real estate is still terrible."

The Future a Massive Struggle

Asked whether he thought the U.S. would experience another Great Depression, Davidowitz said the coming years will look more like Japan today vs. the U.S. in the 1930s.

People will be making and spending less money and the nation as a whole will be dealing with the consequences of the deficit, he says. "We are in a struggle, day by day it's ugly. At the core, when we look at our debt, we are going to have to deal with it."

A few months ago, while other analysts claimed that the economy would continue to follow a V-shaped recovery path, Davidowitz seemed out of step by insisting the nation's problems were still dire. Regardless of what you think of his message or style, Davidowitz's doom and gloom outlook now appears much more credible.