More than 90 per cent of economists predict the US recession will end this year, although the recovery is likely to be bumpy.
The assessment came from leading forecasters in a survey by the National Association for Business Economics (NABE) of 45 economists. About 74 per cent of the forecasters expect the recession — which started in December 2007 and is the longest since World War II — to end in the third quarter. Another 19 per cent predict the turning point will come in the final three months of this year, and the remaining 7 per cent believe the recession will end in the first quarter of 2010.
Unemployment will climb this year, the NABE forecasters predict. For all of this year, the forecasters said the unemployment rate should average 9.1 per cent, a big jump from 5.8 per cent last year. If NABE forecasters are right, it would be the highest since a 9.6 per cent rate in 1983.
With joblessness rising, consumers are likely to stay cautious. Seventy-one per cent of the forecasters believe a more-thrifty consumer will be around for at least the next five years.
The US economy should contract by 2.8 per cent this year. That’s worse than the 1.9 per cent drop they forecast in late February. If they are right, it would mark the worst annual contraction since 1946, when economic activity fell by 11 per cent.
Still, the forecasters believe the worst is already behind the country in terms of lost economic activity.