Wall Street Journal Sees Economists Growing Less Optimistic For Quick Recovery
An article in the Wall Street Journal says that economists hopes for a recovery in the second-half of 2009 are fading fast. Some economists now see declining growth through the end of the year.
The average forecast now sees growth in the third quarter at 0.7%, less than half the rate expected last fall. The fourth-quarter picture has also darkened, but just slightly, to growth of 1.9% from the 2.1% seen in November. Five economists see growth declining through the fourth quarter of 2009; they say the current consensus outlook, which says the recession will end in August as GDP growth returns positive, is far too optimistic.
Some of the more pessimistic economists believe the increase savings habits by consumers and the tighter lending habits of bankers are going to prevent a quick recovery.
"The consensus is usually late to the party," said Brian Fabbri, chief economist at BNP Paribas, noting that he was one of the few to forecast the current recession two years ago. Now, he is one of the five who sees GDP declining through the end of 2009, along with Joshua Shapiro, chief U.S. economist at forecasting firm MFR Inc., Paul Ashworth of Capital Economics, Swiss Re chief U.S. economist Kurt Karl and retired Vanderbilt University professor J. Dewey Daane.
"We're in trouble," Mr. Fabbri said. "We don't have sufficient economic plans at present to resolve the banking system or the financial crisis, and the stimulus package seems loaded for 2010." He added that the global nature of the downturn along with U.S. consumers' increased saving and lenders' tightened standards all stand in the way of a quick recovery.
There hasn't been any letup in the pace of the layoffs either so that should mean problems for consumers are going to get worse before they get any better.
