(Logo: http://www.newscom.com/cgi-bin/prnh/20090105/56509LOGO)

BNA's mid-year survey of 23 well-known economists found that the consensus predicts the economy will contract 2.6 percent this year and will expand 2 percent next year. That would match the growth pace of 2007 but is well short of the 3.1 percent the world's largest economy averaged in 1995-2004, according to the International Monetary Fund.

All but three of the BNA panelists expect real GDP to turn positive in the summer and only one sees the decline continuing into the fourth quarter. But growth of 2 percent in 2010 is not brisk enough to keep the unemployment rate from rising further: it is forecast to average 9.9 percent next year. It was at 9.4 percent in May.

   Survey panelists predict a sluggish recovery, in which:    --  The recession will end this summer, but most consumers won't recognize       it as a recovery until the middle or latter part of 2010.   --  Federal Reserve policymakers will keep monetary policy on hold this       year. That will change in 2010 as the central bank acts to remove some       easing, though not very aggressively, since inflation is expected to       remain low. The consensus predicts the federal funds rate will reach 1       percent by the end of next year.   --  Long-term interest rates as measured by the yield of the 10-year       Treasury bond will rise to 4.33 percent by the end of 2010 from an       average 3.82 percent at the end of this year. It is around 3.5 percent       now.   --  Credit conditions improve and the $787 billion fiscal stimulus package       bolsters spending and mitigates state and local government cutbacks.   --  The glut of housing inventory weighing on the economy is beginning to       correct as businesses which did not anticipate the absolute collapse       of sales activity late last year realign inventories appropriately.   --  The Obama administration's stimulus package will help support the       recovery, though economists vary on how much weight to give it,       particularly in the first year. Consensus is that, mostly by       increasing business confidence, it will return the economy to full       employment faster than would have been the case without it.   --  GDP will start expanding again this year but growth will be uneven as       many areas -- like construction -- continue to shed jobs. Construction       job losses will be mitigated somewhat by home building and       stimulus-funded projects, but not enough to offset significant decline       in nonresidential construction.   --  A total of about 6 million payroll jobs have been lost, or 4.3 percent       of employment since the recession began in December 2007. Panelists       expect total losses to reach 7.6 million jobs by the time employment       hits bottom in the first half of 2010, although the pace of the       decline will decelerate steadily.    --  In the first half of 2010, payrolls will grow on average 51,000 a       month.    

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