Results of a recent survey conducted by the National Association for Business Economics (NABE) show that more than 90% of economists predict the recession will end this year (http://news.yahoo.com/s/ap/20090527/ap_on_bi_ge/us_economic_recovery/print). About 74% of forecasters expect the recession to end in the third quarter, while 19% predict the end will come in the final three months of this year.
Unfortunately, since the financial crisis which struck last fall was the worst since the 1930’s, economists expect recovery to be slow. According to NABE president Chris Varvares, “While the overall tone remains soft, there are emerging signs that the economy is stabilizing. The economic recovery is likely to be considerably more moderate that those typically experienced following steep declines.” Companies won’t be in a hurry to hire until they feel certain that the recovery is firmly rooted. This means the unemployment rate will continue to rise and will most likely average around 9.1% for the year.
Despite predictions for emergence from this recession in 2009, NABE forecasters believe that the economy’s overall performance for the year will be rotten. In updated projections, forecasters stated that the economy will contract by 2.8% this year, following a 6.3% decline in the final three months of 2008 and a 6.1% annualized pace in the first three months of 2009 (the worst six-month performance in 50 years).
However, economists are predicting 2% economic growth in 2010. Additionally, because recovery is expected to be slow, forecasters predict the Fed won’t start boosting interest rates until the second quarter of next year.