Thursday, May 28, 2009

U.S. Recession May Soon End, Economists Say

Ha Ha Ha and I am laughing all the way to the BANK---ruptcy court, that is!
Dont believe the hype. They are just trying to build up confidence to get us to spend-baby-spend. The worst is yet to come and we will be "in it" for a long long time, maybe even years. "Confidence" may be going up (for the easily deluded or for those profiting off of the recession) but the value of the dollar is going steadily down down down and we are about to lose our SC&E A+ status. Even and espically our children will "feel the pinch" as they inherit our GROSS(and I do mean gross) national debt to be paid for with higher taxes; welcome children to the IOUSA! This recession thing may NEVER end if we dont wake up, smell the coffee and set about initiating some REAL change for a change.

By Shobhana Chandra

May 27 (Bloomberg) -- The U.S. recession will probably end in the third quarter, a survey of business economists showed, even as rising joblessness indicates the recovery will be weaker than previously estimated.

The world’s largest economy will begin to expand next quarter, according to 74 percent of economists in a National Association for Business Economics survey. Compared with NABE’s February poll, growth will be slower and unemployment will be higher in the second half of this year and through 2010.

Government stimulus spending and Federal Reserve efforts to thaw credit markets are helping pull the economy out of the worst slump in half a century, the survey said. While housing is stabilizing, the economists predicted consumer spending will be restrained by a deteriorating labor market as job losses continue for the rest of the year.

“There are emerging signs that the economy is stabilizing,” Chris Varvares, president of the group and of Macroeconomic Advisers LLC in St. Louis, said in a statement. Still, the recovery may be “considerably more moderate than those typically experienced following steep declines,” he said.

The economy will shrink at a 1.8 percent annual rate from April to June, and then grow at a 0.7 percent pace in the next three months, the survey showed. Growth will accelerate to a 1.8 percent rate by the final quarter.

Spending to Fall

Consumer spending, which accounts for about 70 percent of the economy, may fall 0.4 percent this year, compared with a 1.3 percent drop forecast in the prior poll. Purchases will increase 2.1 percent next year, less than estimated in February.

The NABE survey, based on the median forecast of a panel of 45 economists, was conducted from April 27 to May 11.

Signs of a U.S. recovery coincide with evidence that the first global recession since World War II is easing. German investor confidence rose to the highest since 2006 in May and the Bank of Japan last week raised its view of the economy for the first time in almost three years.

Policy measures by central banks and governments “have assisted in reviving trust in the financial markets and the real economy,” Deutsche Bank AG Chief Executive Josef Ackermann said yesterday. “We can already see first positive signs.”

In the U.S., nine of every 10 survey participants said the Fed’s new credit facilities improved borrowing conditions, and 55 percent said the programs also benefited markets that were not directly targeted. At the same time, nearly half the economists said credit was still hard to get.

Home Sales

Home sales may reach a bottom by mid-year, according to 72 percent of the panelists, and more than six in 10 predicted housing starts will hit a trough by that time. The survey showed home prices have further to fall, with 40 percent of the respondents forecasting the declines will continue into 2010 or later.

Payrolls will decrease by an estimated 4.5 million in 2009, pushing the unemployment rate to 9.8 percent by year-end, almost a percentage point higher than the previous estimate of 9 percent, the survey showed. Job gains next year will help reduce the jobless rate to 9.3 percent by the end of 2010.

The outlook for business investment this year also soured compared with the February survey, reflecting sharper pullbacks in spending on equipment, software and facilities, and a bigger reduction in inventories. Economists in the survey also predicted corporate profits will decline 16 percent this year.

The cost of living will fall and worker productivity will improve this year, the NABE report showed. With inflation in check and unemployment rising, Fed policy makers will keep the benchmark interest rate close to zero until the second quarter of next year, at which time a series of increases may push the rate to 1.25 percent by year-end.

To contact the reporter on this story: Shobhana Chandra in Washington at

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