Global Economy: The global downturn will stretch through 2009.
U.S. Economy: Banks are on a slow mend, retail is still flagging.
Human Resources: IRS is scrutinizing COBRA payroll tax refunds.

Global Economy
For the U.S. economy ... hints of a bottom. It’s true there’s further to fall ... second quarter GDP will sink again ... but the sharp drop in inventories sets the stage for a comeback before too long. Still ...
Recovery is likely to be slow, with little oomph to feed global growth. And that, in turn, will be a drag on the U.S. Neither can make much headway alone.

World trade will drop nearly 12% this year, the sharpest contraction since World War II. Of the top 15 U.S. markets, 14 will shrink, and China, the exception, will gain at its slowest pace in 19 years.
Continued growth for only a few sectors: Rail equipment, with strong demand from Saudi Arabia and China. Pharmaceuticals, aided by swine flu fears. Plus jewelry, coins, and artwork ... sought by buyers seeking investments as hedges against inflation.
Foreign investment is also sure to decline, plummeting by 30% to 50% in 2009 worldwide, following an estimated 21% drop last year. The U.S., which gets more foreign money than anywhere else, will lose the most, especially in financial services.

Expect the world downturn to last many months ... till fourth quarter 2009, at least. And any number of nasty surprises ... another big corporate or bank failure, particularly in Europe, or a swine flu pandemic ... could postpone recovery into 2010.
When the trend turns up, it will be weak, with continued high unemployment discouraging consumers from spending and businesses balking at major purchases until they’ve cleared their books. Plus lenders leery of high risk investments will mean slower growth in many once hot emerging markets, notably Russia.

Among the last to emerge from the downturn: The euro zone and Japan. Both rely heavily on exports and won’t or can’t do much more in stimulus spending. What’s more, banks in the euro zone are in even worse shape than those in the U.S.
Canada, Mexico and the United Kingdom won’t provide much impetus. The first two depend so much on U.S. export markets that until the U.S. recovers, they won’t be able to, either. Mexico is also struggling with much lower oil revenue, and its tourism industry has been crippled, first by drug violence and now by flu. The U.K., meanwhile, is reeling from housing and bank crises worse than in the U.S.

Only China is in a position to act as an engine of global growth. With low government debt, huge foreign currency reserves, and state-run banks that lend on command, Beijing has more leeway to pump up domestic growth. While coastal provinces are suffering as trade withers and manufacturing slumps, China’s interior is enjoying the benefits of a wave of infrastructure spending.
But it’s no substitute for the U.S. China ... 7% of world GDP. The U.S ... 24%.

U.S. Economy
It’ll take a while yet to gin up much interest in buying toxic mortgage assets. For now, most private wealth is watching and waiting to see how Uncle Sam structures partnerships it hopes will get the securitized loans off bank balance sheets. Also giving private investors pause: The potential for congressional interference, given lawmakers’ penchant for slapping companies that accept federal rescue funds.
But by late summer, private equity will start pouring in. Some of those that have already plunged in ... WL Ross & Co., the Blackstone Group, Pimco, etc ... made a killing in the ’80s fire sale of savings & loan assets and expect to do so again.

Failed banks will hold more attraction as well. Deepening discounts will prompt more private investors to jump the necessary hurdles to acquire some of the 100-odd banks we expect to flop this year. Federal regulatory agencies won’t make it especially easy ... balking at loosening of bank holding company rules, for example. But they are trying to ease the path a bit, with new “shelf charters” that get investors close enough to a full bank charter to let them bid at FDIC auctions. And FDIC is discouraging new bank charters, nudging investors to the “used” market.

Shopping mall owners haven’t seen the worst yet. Although closure plans have been announced, many stores are still in the process of shutting their doors, so the pain of lost rents hasn’t yet been felt. Vacancies ... 8% in the first quarter ... will head still higher. And the recent bankruptcy of General Growth Properties, the country’s second largest mall owner, may spur the sale of some of its real estate. That will further pressure mall values and give tenants even more negotiating power.

Human Resources
IRS is moving fast to police claims of COBRA subsidies for laid off workers. Computers will flag questionable claims, generating a notice to the employer and follow-up by an examiner a month later. The first notices will go out in mid-May. Employers won’t get the promised payroll tax refund until any issues are cleared up.

A growing risk: Employment discrimination cases based on national origin. Already up 13% in 2008, such cases are likely to see another jump, spurred by layoffs brought on by the recession combined with an increasingly diverse labor force.
For EEOC guidance to help you avoid problems, check out this manual at kiplinger.com/letterlinks/discrimination ... plenty of practical, real-life examples.
Take care with “English-only” policies ... proving to be especially confusing.
They can be legal, but often aren’t. Requiring that only English be spoken is OK if it’s a business necessity to ensure safety or for cooperative work, for example. Even then, all employees must abide by the rule and no other language be accepted.