U.S. Recession to End in Second Half of 2009

May 27, 2009
The National Association for Business Economics sees 1% growth in Q3, 2.1% in Q4.

The reeling U.S. economy is poised to emerge from recession in the second half of the year, but recovery will be lackluster, a survey of economic forecasters showed on May 27. The National Association for Business Economics said a survey of 45 professional forecasters found that the consensus believed the end of the prolonged recession that began in December 2007 was finally was in sight.

"While the overall tone remains soft, there are emerging signs that the economy is stabilizing," according to NABE's latest survey and its president, Chris Varvares. "The survey found that business economists look for the recession to end soon, but that the economic recovery is likely to be considerably more moderate than those typically experienced following steep declines," said Varvares, who is president of Macroeconomic Advisers.

The NABE outlook showed that panelists expected gross domestic product (GDP) -- the country's goods and services output -- to shrink by 1.8% in the second quarter. But the NABE panel, in the survey taken between April 27 and May 11, downgraded the outlook for the next several quarters. The panelists said a sharp pullback in business investment was stoking near-term weakness, and cited rising government spending as a "vital support" to the ailing economy.

The consensus forecast continued to see a "modest" rebound in the second half, beginning in the third quarter, "followed by steady improvement," NABE said. But overall the lackluster rebound was expected to post a meager 1.2% annual pace, "well below trend," in the second half of the year. That would include growth of 1% in the third quarter and 2.1% in the fourth quarter.

For 2010, meanwhile, the NABE pegged average growth at just 2%, down from its earlier projection of 2.4% growth.

NABE said the key downside risks continued to loom large: steep job losses, extremely tight credit conditions and falling home prices. "These same forces are causing consumers to remain cautious, a feature that NABE panelists think is here to stay," the association said. Consumer spending is considered key to economic recovery since it represents about two-thirds of U.S. output.

The NABE panel predicted that labor market conditions would deteriorate further, but the pace of job losses would decline through the rest of the year. "A total of roughly 4.5 million jobs are expected to be lost in 2009, driving the unemployment rate to 9.8% by year-end," NABE said. The panelist projected "modest" job gains in 2010 that would trim the unemployment rate to 9.3% by the end of next year.

Copyright Agence France-Presse, 2009

Popular Sponsored Recommendations

Global Supply Chain Readiness Report: The Pandemic and Beyond

Sept. 23, 2022
Jabil and IndustryWeek look into how manufacturers are responding to supply chain woes.

Empowering the Modern Workforce: The Power of Connected Worker Technologies

March 1, 2024
Explore real-world strategies to boost worker safety, collaboration, training, and productivity in manufacturing. Emphasizing Industry 4.0, we'll discuss digitalization and automation...

How Manufacturers Can Optimize Operations with Weather Intelligence

Nov. 2, 2023
The bad news? Severe weather has emerged as one of the biggest threats to continuity and safety in manufacturing. The good news? The intelligence solutions that build weather ...

How Organizations Connect and Engage with Frontline Workers

June 14, 2023
Nearly 80% of the 2.7 billion workers across manufacturing, construction, healthcare, transportation, agriculture, hospitality, and education are frontline. Learn best practices...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!