WASHINGTON — 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 to be released today. 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 War World 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, 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.
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. If NABE forecasters are right, it would be the highest since a 9.6 percent rate in 1983.
The NABE outlook from 45 economists was conducted April 27 through May 11.
With joblessness rising, consumers – major shapers of overall economic activity – likely will stay cautious, making for a tepid turnaround.
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 under their old forecast. 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.
For the current 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.Many forecasters also predict that home sales will hit bottom by the middle of this year, another stabilizing factor for the economy. A report on sales of previously owned homes will be released today, and data on new-home sales is due Thursday.
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