According to an Associated Press survey of leading economists, economic recovery in the US will remain very slow far into 2011.
Citing employers’ reluctance to hire and shoppers’ unwillingness to spend, the economists appear less impressed with the pace of recovery than they did three months ago. Even so, they remain convinced that the US is on track, nevertheless.
Weaker growth coupled with higher unemployment will result in the Federal Reserve keeping interests close to zero well into next year, but the majority believe that a double-dip recession can be avoided.
The survey has compiled the forecasts from leading economists in the academic, corporate and private sectors and lists the following as some of the most harrowing:
- Weakening economic growth through the rest of 2010 and into 2011, down to 3% from the current 3.5%
- Loss of tax income forcing state and local governments to reduce spending on services and lay of service jobs
- An unemployment rate by the end of 2011 exactly where it is now at 9.5%, with no fall to lower, average levels until at least 2015
The reason for the pessimism seems to have roots back in May when the European debt crisis sent stocks tumbling and cast doubt on a speedy recovery. The news will have strong repurcussions for both Democrats and Republicans as they head into the November mid-term elections, particularly the Democrats who have the most to lose. It also looks set to cause increasing problems for President Barack Obama.
This comes on the back of another poor outlook in the Fed’s survey on Wednesday, which shows a similar bleak and bumpy road ahead for the recovery for most of the country.
