The Great Recession is over, according to a survey 44 economists surveyed Sept. 2 through Sept. 24, by the Washington, D.C.-based National Association for Business Economics (NABE).
“The survey found that the vast majority (80 percent) of business economists believe that the recession has ended but that the economic recovery is likely to be more moderate than those typically experienced following steep declines.
“The NABE panel upgraded the economic outlook for the next several quarters,” said NABE president-elect Lynn Reaser, chief economist at Point Loma Nazarene University. “Following a sharp 6.4 percent (annual rate) contraction in the first quarter of this year and another 0.7 percent drop in the second quarter, NABE forecasters expect real GDP to rise at an above trend 2.9 percent rate in the second half. The more-than-three-year downturn in the housing market is very close to coming to an end, with substantial growth (from a low base) expected for next year.” In fact, forecasters expect 2010 to be the first year since 2005 that the housing sector will contribute to overall growth. Home prices are expected to rise 2 percent in 2010, but panelists do not believe that will stifle the housing recovery.
Reaser points out that, according to the survey, the “key areas of concern involve the large increases in federal debt and unemployment rates that are expected to remain very high through next year. The unemployment rate is forecast to rise to 10 percent in the first quarter of next year and edge down to 9.5 percent by the end of 2010. Inflation is expected to remain contained throughout 2010,” he said.
Worries about unemployment are likely to constrain household spending. Personal consumption spending likely began rising in the second half of this year, but is expected to remain low in 2010. Still, Americans aren't expected to save as much as they have in past decades.
“The good news is that this deep and long recession appears to be over, and with improving credit markets, the U.S. economy can return to solid growth next year without worry about rising inflation,” concludes Reiser.
Amen to that.
