Economist: Recession is over but U.S. will have a lackluster recovery
It will be an "uneven" economy this year, economist tells NEDA attendees
Jim Carbone -- Purchasing, 11/5/2009 3:28:48 PM
The recession in the U.S. has ended, but there will be a "lackluster recovery" with unemployment running high until later in 2010, according to the chief economist of Northern Trust Corp., a financial services company.
It will be an uneven recovery for at least a year, says Paul Kasriel, who delivered the economic forecast at the annual Executive Conference of the National Electronic Distributors Association (NEDA).
He says the recovery is not being led by any one particular sector of the economy. However, there are a number of sectors beginning to show some modest growth and some others have been in a freefall are falling at a more measured pace. Housing is one example.
"A year ago if I told you housing would help us out of the recession you would have questioned my sanity," Kasriel told the electronics industry executives.
But there has been a sharp decline in home prices and mortgage rates are near 30-year lows making housing affordable. "High housing affordability and the first time homebuyer tax credit have resulted in increases in home sales in four of the last five months," he says.
The Cash for Clunkers program has also helped the economy by driving new car sales. Kasriel says the government's stimulus program will drive the economy moving forward because much of the funding in the program has not yet been spent, but will be over the next year.
There was also an increase in spending by businesses in the third quarter. "We had increases in business equipment spending in the third quarterly largely in the electronics field," says Kasriel. He says the recovery of the global economy will help the U.S. economy because it will increase exports. Preliminary reports indicate U.S. exports were up 15% in the third quarter, says Kasriel.
He says exports of agricultural products and equipment medical equipment such as X-ray and MRI machines will grow as well as pharmaceutical exports.
Kasriel says for the next several quarters, it will be a "jobless recovery" because the economy will not grow rapidly which is necessary for jobs to be created.
In addition, the work week right now averages about 33 hours, the lowest it has been since 1965. "As demand picks up business can simply extend their workweek of their current staff rather than going out to hire new staff to accommodate that increased demand," he says.
He says employment will pick up late in 2010 as the stimulus money is spent.
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