Survey: Most economists see recession end in ‘09

WASHINGTON (AP) — More than 90 percent of economists predict the recession will end this year, although the recovery is likely to be bumpy.

That assessment came from leading forecasters in a survey by the National Association for Business Economics released Wednesday. It is generally in line with the outlook from Federal Reserve Chairman Ben Bernanke and his colleagues.

About 74 percent of the forecasters expect the recession — which started in December 2007 and is the longest since World War II — to end in the third quarter. Another 19 percent predict the turning point will come in the final three months of this year, and the remaining 7 percent believe the recession will end in the first quarter of 2010.

"While the overall tone remains soft, there are emerging signs that the economy is stabilizing," said NABE president Chris Varvares, head of Macroeconomic Advisers. "The economic recovery is likely to be considerably more moderate than those typically experienced following steep declines."

One of the major forces that plunged the economy into a recession was the financial crisis that struck with force last fall and was the worst since the 1930s. Economists say recoveries after financial crises tend to be slower.

Against that backdrop, unemployment will climb this year even if the economy is rebounding, the NABE forecasters predict. Companies won’t be in a rush to hire until they feel certain any recovery is firmly rooted. For all of this year, the forecasters said the unemployment rate should average 9.1 percent, a big jump from 5.8 percent last year and up from its current quarter-century peak of 8.9 percent. If NABE forecasters are right, it would be the highest since a 9.6 percent rate in 1983, when the country was struggling to recover from a severe recession.

Some forecasters thought the unemployment rate could rise as high as 10.7 percent in the second quarter of next year. The NABE outlook from 45 economists was conducted April 27 through May 11.

General Motors Corp., chemical company DuPont and Clear Channel Communications Inc. were among the companies announcing mass layoffs during the survey period.

With joblessness rising, consumers — major shapers of overall economic activity — likely will stay cautious, making for a tepid turnaround. And given the big bite the recession has taken out of household wealth, notably the values of homes and investment portfolios, consumers probably will stay subdued for some time.

Seventy-one percent of the forecasters believe a more-thrifty consumer will be around for at least the next five years. Americans’ personal savings rate edged up to 4.2 percent in March, marking the first time in a decade that the savings rate has been above 4 percent for three straight months.

Even as the NABE forecasters believe the country will emerge from recession later this year, they also predict the economy’s overall performance in 2009 will be rotten.

The economy should contract by 2.8 percent this year, the forecasters said in updated projections. That’s worse than the 1.9 percent drop they forecast in late February. If they are right, it would mark the worst annual contraction since 1946, when economic activity fell by 11 percent. Still, the forecasters believe the worst is already behind the country in terms of lost economic activity.

The economy shrank at a 6.1 percent annualized pace in the first three months of this year, on top of a 6.3 percent decline in the final three months of last year, the worst six-month performance in 50 years. For the current April-June quarter, the NABE forecasters believe the economy will shrink at a pace of 1.8 percent. After that, the economy should start growing again — at a 0.7 percent pace in the third quarter and a 1.8 percent pace in the fourth quarter.

Read more.

600450 Survey: Most economists see recession end in ‘09
Date: 8 June 2009

See more news about:

See more from these topics:

Others also read

During the AAMA 2016 National Fall Conference, Michael Collins, partner and managing director of Building Industry Advisors, LLC, provided an economic overview and outlook of the window and door industry.
The American Architectural Manufacturers Association (AAMA) welcomed Ken Gronbach as keynote speaker for the AAMA 2015 National Fall Conference.
The Equipment Leasing and Finance Association (ELFA) which represents the $903 billion equipment finance sector, today revealed its Top 10 Equipment Acquisition Trends for 2015.
The American Architectural Manufacturers Association (AAMA) held the 2010 Western Region Spring Meeting on May 5-6 in Oakland, Calif., featuring several industry experts discussing the current economic outlook, updates to California building codes and other issues directly affecting the Western region of the U.S.According to Rich Walker, AAMA president and CEO, “The Western region faces very specific codes and regulations; therefore, it is imperative to keep members up to date on activities within these states.
Ferro Corporation announced today that net sales for the three months ended June 30, 2009 were $399 million, a decline of 37 percent from the second quarter of 2008.
First-half 2009: amid a sharp slowdown in markets, acceleration and extension of action plan unveiled at the beginning of the year.

Add new comment