Economists see deeper pain, followed by gain
February 24, 2009 00:00:00
NEW YORK, Feb 23 (CNN): A survey of leading economists finds them now forecasting a far deeper and more painful recession ahead in the first half of the year, but a modest pickup in the second half of 2009, followed by a solid recovery in 2010.
"The steady drumbeat of weak economic and financial market data have made business economists decidedly more pessimistic on the economic outlook for the next several quarters," said Chris Varvares, the president of the National Association of Business Economics, which conducted the survey of 47 top forecasters in late January and early February.
"While a few reports offer some glimmer of hope, a meaningful recovery is not expected to take hold until next year," added Varvares, who is also president of the research firm Macroeconomic Advisors.
The forecasts hold little good news for the first half of this year. The economy is expected to decline at a 5pc rate in the first quarter, even sharper than the 3.8pc drop recorded in the fourth quarter of last year. And the group is forecasting another 1.7pc drop in economic activity in the second quarter.
While the economists surveyed are forecasting a 1.6pc gain in economic activity the second half of this year, that won't be enough to overcome the first half weakness, which should result in a 0.9pc full-year drop in U.S. economic activity when comparing the fourth quarter of this year to a year earlier. That would be the biggest drop on that basis since 1982, and far worse than the year-over-year decline of 0.2pc recorded in the fourth quarter of 2008.
As recently as NABE's November survey, the consensus of economists was that there would be 0.7pc economic growth during the course of 2009. Last May's survey found the group forecasting a healthy gain of 2.7pc during the year.
But the outlook for this year has clearly gotten much worse since the earlier surveys in just about every measure. The economists are forecasting unemployment rising to 9pc for the fourth quarter of 2009, up from their previous 7.5pc estimate.
