That’s what economists are saying. And not just any economists — a panel of 45 economists from the National Association for Business Economics Outlook (NABE). In the report issued yesterday, the panel stated:
- They expect a further decline in economic activity during the second quarter, making for the most severe economic contraction in over half a century.
- The near-term weakness is largely due to a sharp retrenchment in business investment.
- Rising government spending will provide vital support to the economy, as the only major expenditure area posting positive growth in 2009.
- A modest second-half rebound in real GDP is still expected.
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- Growth in 2010 is slated for a return to near its historical trend, with real GDP rising 2.7% on a fourth quarter- to-fourth quarter basis.
- Labor productivity remains impressive and is expected to improve.
Chris Varvares, NABE’s president, stressed that though economic recovery is in sight, the economy will continue in a downward spiral for the next several quarters.
According to the report, the key downside risks remain continued large job losses, no improvement in credit conditions and further sharp declines in home value.
“The good news is that the NABE panel expects economic growth to turn positive in the second half of this year, with the pace of job losses narrowing sharply over the remainder of this year and employment turning up in early 2010,” Mr. Varvares said.
Though the report claims the next several months will remain challenging for businesses and consumers, let’s hope Mr. Varvares and NABE are correct in their long-range future predictions.
What do you think? Do you agree with NABE’s forecast?
