By Arun Kumar,IANS,
Washington: More than 80 percent of top US economists believe that America has started pulling out of its worst downturn since World War II, but they expect a slow and painful recovery, according to a new survey.
Most economists agree the US recession that started almost two years ago is finally over, but they don’t expect meaningful improvement in jobs, credit or housing for months to come, according to the survey by the National Association for Business Economics (NABE).
The group’s survey of 43 top economists last month included economists from leading Wall Street firms and major corporations, as well as from highly respected universities and research firms.
Thirty-five respondents, or 81 percent, believe the recovery has begun. Only four, or 9 percent, believe the economy is still in a recession. The other four say they’re uncertain.
Economists in the survey forecast that the US economy grew at an annual rate of 3 percent in the three months that ended in September, though the official reading of gross domestic product won’t be out for weeks.
And all of the economists surveyed expect the recovery to be slow and painful, leaving many people and businesses feeling the effects of the downturn for years to come.
The NABE survey results echo comments of many other prominent economists who have recently said they think the economy hit bottom at some point this summer.
Most notably, a recent statement from the Federal Reserve declared that economic readings “suggest economic activity has picked up following its severe downturn”.
Still, the NABE survey found that economists are forecasting lingering weakness in the labour and housing markets, and that the tight credit markets will continue to be a drag on economic growth into next year.
Unemployment, which was at a 26-year high of 9.8 percent in September, is forecast to hit 10 percent during the last three months of this year, and stay there through the first quarter of 2010. By the end of next year, it’s only expected to fall back down to 9.5 percent.
About 54 percent of those surveyed don’t expect the economy to regain the jobs it lost during the recession until 2012, while another 38 percent expect that to take even longer. Just three of the economists that the NABE spoke to expect these jobs to come back in 2010 or 2011.
And many don’t think the worst is over yet for housing either. About a third of economists believe that home prices won’t bottom out until early 2010 or later, while a quarter of them believe the low will come in the fourth quarter.
Half of those surveyed expect the financial markets to continue to be a drag on the economy until next year, while 30 percent of them said that trend could continue into 2011.
The NABE last surveyed economists in May, and they were far less optimistic at the time. Only 18 percent of them thought the economy would recover in the last quarter of 2009, while 7 percent saw a turnaround sometime in 2010.