A recent poll of 47 economic forecasters offered a glimmer of hope for the economy. However, results point to the economic recession to continue through mid-year 2009.
Released on Monday, the poll was conducted by the National Association of Business Economists (NABE). And while survey results had the economy contracting sharply in the first quarter – the current cyclical downturn rivaling the 1973-75 slump – economist predicted the recession-hit economy would begin to recover in the second half of the year, with a potential growth trend in 2010.
“The steady drumbeat of weak economic and financial market data has made business economists decidedly more pessimistic on the economic outlook for the next several quarters,” said NABE President Chris Varvares. “Credit conditions remain tight and declines in equity markets and home values, combined with significant job losses, are causing consumers to rein in discretionary spending.”
Following a sharp 5 percent contraction in the first quarter of this year and another 1.7 percent drop in the second quarter, forecasters predicted real GDP to rise at a sub-par 1.6 percent rate in the second half. This leaves a decline of 0.9 percent in 2009, on the heels of a 0.2 percent decline in 2008.
Forecasters also said the unemployment rate is forecast to rise to 9 percent by the end of the year. Inflation is expected to be moderate, as economic slack builds and as oil prices are forecast to remain relatively depressed.
The good news is that economic activity is expected to turn up in the second half of the year and 2010 is expected to see modestly above-trend growth of 3.1 percent, according to the report.
“While a few reports offer some glimmer of hope, a meaningful recovery is not expected to take hold until next year,” said Varvares. “Further pronounced weakening in housing and deteriorating labor markets underscore the risks for 2009.
“The good news is that economic activity is expected to turn up in the second half of the year and 2010 is expectede to see modestly above-trend growth of 3.1 percent.”