Oct. 6--Almost two years into the current job-killing recession, a tentative economic recovery is here, and the stock markets could climb an additional 5 percent by year's end, says John E. Silvia, chief economist for Wells Fargo Securities L.L.C.

But a double-dip recession could slam the nation in 2010, and there are structural economic problems that have to be addressed in Washington to solve the nation's long-run flaws, the economist warned a Union League crowd of wealth managers, lawyers, and consultants here last week.

The shift to professional and service jobs from blue-collar factory jobs appears to be finally catching up with the U.S. economy and has become painfully apparent in the current recession, Silvia said, noting that this shift was "starting to overwhelm American society." He noted in an interview that "a lot of people don't have the right skills or are not located in the right place for new jobs, and that is a great challenge."

Silvia's message last Tuesday at the club on South Broad Street was one of cautious optimism. It was joined by an exuberant prediction by Byron Wien of Blackstone Group L.P. that the SandP would hit 1,200 by year's end -- it closed at 1,040 yesterday. The markets sagged last week on doubts about the strength of the recovery. A survey of economists by Bloomberg predicted the SandP to be at 1,037 come Jan. 1.

The Inquirer asked five other economists to predict where the SandP would be at the end of 2009 and on July 1 2010. It also asked when they thought the SandP would be back over 1,400.

Silvia says there's a recovery. It's fueled by federal deficit spending, which can't be sustained, and inventory restocking by big corporations that anticipated "Armageddon" earlier in the year and drastically curtailed orders. That restocking doesn't indicate higher demand from consumers or businesses.

Fourth-quarter growth should be respectable, Silvia said, and the major stock-market indexes should rise on the optimism.

But the U.S. economy, Silvia said, is living with the excesses of overbuilt housing and commercial markets, higher federal deficits, overextended consumers, and a weak job picture. Unemployment, even when the economy confidently enters a sustained recovery, is likely to be permanently higher. He estimates the longer-run rate at 6 percent.

"We are nowhere near the typical recovery in terms of jobs," said Silvia, who spoke in a second-floor Union League meeting room of plush carpets and oil paintings. About 25 professionals gathered to hear him and eat lunch of tilapia, chicken, and steamed vegetables.

Silvia estimated in his presentation that the U.S.