End in sight for recession, but job woes will persist
The U.S. economy is set to emerge from recession in the second half of this year as consumer spending and the housing sector recover, but unemployment will rise well into 2010, according to a survey released today.
The Blue Chip Economic Indicators survey of private economists showed that 86 percent of respondents believed that the economic downturn will be declared to have ended in the second half, Reuters reported.
“Real GDP contracted very sharply during the first quarter of this year and will continue to shrink, albeit more slowly, in the second quarter before turning very modestly higher in the third and fourth quarters,” the survey said.
Much of the anticipated turnaround in the economy, now in its 16th month of recession, is expected to be driven by improvement in consumer spending, housing, business inventories and exports.
Gross domestic product plunged at a 6.3 percent annualized rate in the fourth quarter of 2008, the steepest quarterly decline since 1982. The economic downturn will next month become the longest U.S. recession since the Great Depression.
However, recent economic data have suggested that the pace of deterioration might be slowing.
Consumer spending, which accounts for over two-thirds of U.S. economic activity, will be supported by tax cuts from the government’s $787 billion stimulus package, the extension of unemployment benefits and lower inflation, according to the survey.
But even with the anticipated improvement in the economy’s fortunes, companies were expected to continue to cut jobs well into 2010, the survey showed.