Economy To Get Worse This Year: NABE

There's good news and bad news about the economy in today's survey from the National Association of Business Economics.

First the bad: 2009 is going to be a tough year all the way through. Economic growth is expected to drop by 0.9 percent in 2009 as the current recession isn't expected to end until the middle of the year. Economists are "decidedly more pessimistic on the economic outlook for the next several quarters" thanks to tight credit conditions, falling home and stock prices, and the fearful consumer. Bottom line: "While a few reports offer some glimmer of hope, a meaningful recovery is not expected to take hold until next year." But 2010 looks better. "The good news is that economic activity is expected to turn up in the second half of the year and 2010 is expected to see modestly above-trend growth of 3.1%," the group says. The survey was taken between Jan. 29 and Feb. 12.

Highlights from the NABE below:

• The NABE panel is expecting the recession to continue through mid-year 2009, with large declines in real GDP during each of this year’s first two quarters.  Cumulatively, the cyclical downturn will rival that of 1973-75.
• Economic weakness will be dominated by a retrenchment in consumer spending reflecting large employment and wealth losses.
• Business investment will experience an exaggerated cyclical decline characteristic of economic downturns
• Real government spending is expected to advance a robust 2.8% in an otherwise grim 2009
• The consumer price index is projected to decline 0.8% in 2009, as already large commodity price declines pass through to consumer prices.
• The jobless rate will peak at 9.0% by the end of the year.  House prices are predicted to decline 5% during 2009, though the S&P 500 index is expected to rise a solid 8% by December 31, 2009.