What's more, the survey indicated that members believe the recession started in Q4 2007 or Q1 2008, with about 60% expecting a mild contraction (a real GDP decline of 1.5%), with the rest expecting a deeper recession.
For 2009, the NABE's members see the U.S. economy growing just 0.9%. Economists surveyed expect the unemployment rate to rise to 7.5% by the end of 2009.
Economist Richard Felson, who did not participate in the survey, said the sentiment expressed in the survey is in-tune with economic conditions. "With consumer spending, business investment and housing all slumping, we can't point to a growth engine to stem the downtrend," Felson said. "That points to a significant GDP slump, and the slump will be worse, if credit conditions do not normalize."
For 2008, the NABE's members see U.S. GDP rising just 1.4% -- its weakest performance since 2001 -- and down from 2% GDP growth in 2007.
Further, if U.S. GDP totals the above rates for 2008 and 2009, that would the U.S.'s worst GDP growth over a two-year period since the early 1980s, the NABE said.
In general, economists surveyed cited a pullback in consumer spending stemming from worse household wealth and income conditions as the major reasons for the U.S. GDP slump.
Economic Analysis: Inflation is expected to moderate during the recession, assisted by contained/lower oil prices, but that's the only positive projection in the survey. Moreover, after evaluating the survey's tone, if the U.S. economy begins to emerge from its slump in the second half of 2009, that would be considered a major accomplishment and a pleasant upside surprise.
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Reader Comments (Page 1 of 1)
11-17-2008 @ 10:19AM
Stanley Richardson said...
Why am I always seeing a reference to "credit conditions" meaning things will turn around when consumers start borrowing and buying again when the pundits refer to the economy?
Things are not going to "turn around" until prices fall and real wages rise. Forget expecting the consumer to continue to keep the economy afloat.
11-17-2008 @ 10:31AM
Amanda said...
I agree with that one comment. We cannot get out of this economical disaster when all of our jobs are being sent to other countries and our wages are so low that we cannot afford to even put food on the table. Then people are forced to resort to government aid which in return comes form the tax payers so exactly how are we supposed to correct this situation? Bring back our real jobs. Stop bailing out the banks. Bail us out!
11-17-2008 @ 10:57AM
Ramu Polisetty said...
Even though I live in India, I did my undergrad in Econ in MI, so I do have a fair understanding of the US Economy. I completely agree with both the earlier comments. I believe the US Gov has to get its act together and look at the long term picture. Manufacturing has to be boosted in the US, get people some jobs and make them spend eventually. The "cycle" has to start all over again. If not the bailing out isn't going anywhere. This time the Corporations have to be put on a leash and make them feel "really" responsible.
11-17-2008 @ 11:12AM
BHarrison said...
The economy is not going to “bottom out” and start to improve until:
• INTEGRITY has to be restored to the market BEFORE investors will invest in the markets
• Consumers will not have the “faith and confidence” to start buying until the markets stabilize;
• Market stabilization and increased economic activity will not begin sufficiently until the corporations are purged of the CORRUPT management who orchestrated and perpetuated the MASSIVE FRAUDS that have undermined our economy;
• NONE of this will be possible until Congress establishes reasonable “oversight and regulation” of the business activities.
• This will require purging Congress of the INEPT, INCOMPETENT, and CORRUPT Congressmen who allowed these FRAUDS to occur.