Jim Jubak as MSN Money looks at the financial crisis from the perspective of an investor. He’s not optimistic about getting easy gains from investing in the tough times coming up.

In the excerpts below he describes why we won’t see a recovery for several years.

Link: 5 rules for post-recovery investing – MSN Money – Jubak’s Journal

The Congressional Budget Office predicts the U.S. economy won’t return to full-trend growth until 2015. And full-trend growth — sustainable economic growth without rising inflation — even then isn’t going to be what it was before the global financial crisis.

…a lot of evidence argues in favor of a very slow and tepid recovery:

• In the boom, the economy got the benefit of the wealth effect as families spent part of the gains in the value of their houses and investment portfolios. Now the economy is facing a negative wealth effect as lower home values and smaller investment portfolios cut into household spending. Household net wealth was down 20% from mid-2007 to the end of 2008.
• Like U.S. businesses, American families are going to have to deleverage their balance sheets by paying down debt. That means having less to spend on consumption. Household debt had climbed to 130% of income by the end of 2008.
• Losses in the financial sector of an estimated $2 trillion (only $1 trillion realized to date) will cut the amount of capital available for lending and raise the price of that capital.
• Any recovery will send the price of oil and other raw materials higher, which will act as a drag on the economy. Taxes will climb as governments around the world try to repay some of the debt they had piled on to end the crisis. In the United States, interest rates will climb as overseas investors demand a better return on all the U.S. debt they hold.
• Finally, many companies used cheap money to offer incentives to keep their customers buying. Even in a recovery, sales won’t bounce back to boom-year levels.