So Much For The Summer Of Recovery
There are further signs that the economy will remain anemic through the end of 2010, if not longer.
A new survey of economists finds little room for optimism on the economy:
July 10 (Reuters) – The U.S. economy will lose steam as the year progresses but will not slide back into recession, even though unemployment is unlikely to fall significantly, according to a survey released on Saturday.
The Blue Chip Economic Indicators survey of private forecasters found analysts increasingly glum about the outlook. They now see the economy expanding just 3.1 percent in 2010, down from 3.3 percent in the June poll.
They do not, however, envisage a renewed period of contraction, which has been widely debated in financial markets in recent weeks.
“Our panelists think talk of a double-dip recession is overblown absent a new, major shock,” the group said in its report.
Some analysts worry such a disruption might come from Europe, where concerns about high debt levels have made the banking sector jittery about lending.
The report’s findings highlight the risks of a sputtering recovery amid lingering softness in housing, suggesting the unemployment rate will end the year at 9.4 percent, barely down from the current 9.5 percent rate.
“For a second straight month the number of panelists that lowered their forecasts of nominal GDP growth and inflation exceeded those that raised their forecasts by a significant margin,” the report said.
In other words, economists are seeing exactly the kind of anemic, low job-growth, recovery that I talked about earlier this month when the unemployment figures were released. Technically, it won’t be a recession since we’d still have positive economic growth, but that’s hardly going to matter to the hundreds of thousands of people who can’t find jobs, and it’s going to make the next economic downturn that much more painful.
What this also means is that unemployment is likely to remain about 9% through Election Day. If it does drop at all, it will be because more people have simply given up looking for work — which is the reason, incidentally, that the rate dropped from 9.7% to 9.5% in June — and, ominously if you’re a Democrat, the economy will be in forefront of voter’s minds when they go to the polls. That can’t be good news for the White House.