Forecasters expect economic recovery to continue adding jobs, growth at least into 2011
By Dave Carpenter, APMonday, February 22, 2010
Poll: Economists see ‘healthy’ expansion under way
CHICAGO — Economists expect the recovery to remain “firmly on track” over the next two years though job growth is likely to remain slow, according to a new survey.
The latest outlook from The National Association for Business Economics, set to be released Monday, sees regular job gains resuming this quarter but no drop in unemployment below 9 percent for another year. Consumer spending will be relatively sluggish as consumers continue to dig themselves out of debt but inflation is expected to remain subdued, and home prices should rise at a rate slightly above inflation in 2010 and 2011.
“We see a healthy expansion under way, although it will take time to reduce economic slack and repair damaged balance sheets,” said Lynn Reaser, the group’s president and chief economist at Point Loma Nazarene University.
The NABE forecast is largely consistent with its last quarterly forecast in November and reflects an economy in slow-but-steady recovery mode.
Its prediction that unemployment will decline only to 9.6 percent by the fourth quarter also mirrors the Federal Reserve’s forecast last week that the jobless rate will remain high over the next two years because businesses are likely to stay cautious about taking on more workers. The NABE economists foresee an average monthly gain of 103,000 jobs this year.
The survey was conducted before the government released the January unemployment rate this month, showing an unexpected drop in unemployment to 9.7 percent from 10 percent.
Gains in discretionary spending by both businesses and households should power what the economists’ group characterized as a recovery still in its early phase. Still, consumer spending is expected to rise only 2.2 percent this year before increasing 2.8 percent next year, according to the poll. The economists attribute that lackluster rate mostly to past wealth losses and only modest employment gains.
Businesses are expected to play a bigger role in the expansion. That will partially reflect strong gains in corporate profits, forecast to be up 24 percent over the next two years.
Participants in the survey consider the housing market rebound sustainable. Home prices are predicted to rise 1.6 percent in 2010 and an additional 2.6 percent in 2011. Those may not be huge increases but they would still represent an important watershed for the economy, the NABE noted, after the declines of the recent past.
The stock market is expected to climb significantly in 2010 and 2011. On average, the economists predict the Standard & Poor’s 500 index, a widely used barometer of the stock market, will rise 23 percent over the next two years. The S&P 500 jumped 3.1 percent last week, though it’s still down 29.1 percent from its high.
Those surveyed agreed that financial headwinds are expected to remain problematic but also should abate. Bank lending, for example, is seen becoming less restrictive over the course of this year as bank earnings and economic conditions improve.
Nearly a third of those surveyed, however, believe conditions will remain restrictive due to regulatory guidance, capital pressures and a general climate of risk aversion.
Federal debt was identified as the biggest concern among 14 economic challenges.
The NABE survey of 48 professional forecasters was taken Jan. 22-Feb. 4.
Tags: Chicago, Consumer Spending, Corporate Profits, Economic Outlook, Geography, Labor Economy, North America, Public Opinion, United States
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February 22, 2010: 7:34 am
My position over the stimulus package : Let alone the claimed positives, 1. Prior to the review of its outcome, the stimulus package might be about survival or total collapse of the entire economy. 2. At this time, the recovered value on the stock exchange brought on by the stimulus package could add up to as much as over $ 1trillion, far greater than the total of bold move. It reminds me of the familiar saying happiness consists in contentment. 3. Even without striking changes of Republicans in the tacks that led to this crisis, they have recouped ground unexpectedly, representing both the swing to business as usual, or the road to irreparable deficit and the success of stimulus package ironically. 4. Responding to the runaway health care premium, steep energy prices and costly wars, say, the factors of this great recession, the stimulus package and the two pending indispensable bills were brought to the attention of nation as three pillars. Yes, the stimulus package alone can’t settle such eight year long chronic disorders at once. 5. As we are aware, costly wars never go hand in hand with the inevitable energy independence. Here let’s set up the equation about the extended mistake of oil wars. a. The costly wars can’t catch up with the soaring demand for rapidly dropping oil internationally. b. Notably many of developing countries are more prone to the surging energy prices while the U.S. economy turns greatly on global exports. c. Plunging the planet into war mood, America could profit somewhat from selling its weapons, similar to the heroin trafficking in certain countries, America is still borrowing more money from China. As always, negative policy breeds nothing but adverse effects, needless to say self-destruction in the first place. Thanks So Much ! |
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