October 13, 2009 in Business

Economists hopeful expansion has begun

But most remain wary of jobs rate, deficit
Mae Anderson Associated Press
 

Inflation will stay tame, experts say

Inflation is expected to remain low due to the weak labor market and other factors. Thus, the NABE panel – which consists of 44 economists surveyed Sept. 2 through Sept. 24 – expects the federal funds rate to remain at its current record low near zero until late next spring, before a gradual rise begins.

NEW YORK – More than 80 percent of economists believe the recession is over and an expansion has begun, but they expect the recovery will be slow as worries over unemployment and high federal debt persist.

That consensus comes from leading forecasters in a survey by the National Association for Business Economics released Monday.

“The survey found that the vast majority of business economists believe that the recession has ended but that the economic recovery is likely to be more moderate than those typically experienced following steep declines,” said NABE President-elect Lynn Reaser, chief economist at Point Loma Nazarene University.

The forecasters upgraded the economic outlook for the next several quarters but cautioned that unemployment rates and the federal deficit are expected to remain high through the next year. Forecasters now expect the economy, as measured by gross domestic product, to advance at a 2.9 percent pace in the second half of the year, after falling for four straight quarters for the first time on records dating to 1947. They expect a 3 percent gain in 2010.

Still, the federal deficit has ballooned and the jobless rate is expected to lag as employers remain cautious.

The unemployment rate rose to 9.8 percent in September from 9.7 percent, the Labor Department said earlier, the highest in 26 years.

Forecasters expect it to continue to rise, to 10 percent in the first quarter of next year, before falling to 9.5 percent by the end of 2010.

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