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Worst of economic downturn may be over in US, say economists

US economists are generally agreed that America's worst economic downturn since the Great Depression is over, but an average American is unlikely to feel things are significantly better anytime soon.

business Updated: Aug 13, 2009 13:42 IST
Arun Kumar

US economists are generally agreed that America's worst economic downturn since the Great Depression is over, but an average American is unlikely to feel things are significantly better anytime soon.

The Wall Street Journal's survey of top economists, published on Wednesday, found that 57 per cent believe the recession is already over, while another 23 per cent believe that the economy will turn in the next month or two.

Most economists now expect growth in the gross domestic product, the broad measure of the nation's economic activity, of about three per cent or more in the period of July through September.

But the National Bureau of Economic Research (NBER), the body of economists charged with officially setting the start and the end of each recession, won't pronounce a start of the recovery until next year at the earliest, CNNMoney.com said.

Its statement that the 2001 recession ended in November of that year didn't come until 18 months later, it noted. Its pronouncement that the current recession had started in December 2007 didn't come until 12 months after the start. So by the time the NBER says anything about a recovery, it will already be well established.

The closest to an official pronouncement of the end of the recession came in the statement from the Federal Reserve Wednesday that it sees the economy as "levelling out" following its long decline.

But the Fed still cautioned that economic activity would remain weak in the near term. However, Lakshman Achuthan, managing director of the Economic Cycle Research Institute, which forecast in April the recession would end this summer, believes there is now a growing consensus about that turnaround.

"But if you've waited until today to consider the idea that the recession is ending this summer, you're already behind the curve," he was quoted as saying by CNNMoney.com.

Achuthan said it is very difficult to forecast a turn in the economy in real time, and that to try to make the distinction now between whether the economy turned higher in June or July is "a false sense of precision".

Economists say that the other reason that the start of the recovery is not a cause for celebration is it's not yet clear how strong this recovery will be.

And even some of the economists who believe the recovery has already started say this one will be more painful than a lot of recoveries in the past.