Economists' Poll: US 3Q GDP To Rise 2.4%

by Dollars and Sense

That's a big number, and these people are also predicting a 2.2% uptick in the fourth-quarter. It's all due to the unprecedented stimulus and bank recapitalization programs: consumer consumption is very weak, as is business investment. With continuned deleveraging dampening both, and the government spigot starting to close (under the watchful eye of Congressional masochists), it will be a fragile recovery, indeed. Across the Curve has some interesting observations on the outlook today, particluarly as it affects sentiment in the bond market

From Reuters:

U.S. starts long, gradual and fragile recovery

Thu Aug 20, 2009 3:18pm EDT
By Burton Frierson
NEW YORK (Reuters) The U.S. economy is recovering more strongly than expected from its worst recession in decades, but next year will be lackluster and risks of a double-dip downturn remain, economists said in a Reuters poll.

After shrinking by 1.0 percent in the second quarter on an annualized basis, U.S. gross domestic product will grow 2.4 percent in the current quarter and 2.2 percent in the final three months of the year, according to a sample of around 70 economists.

This would make the recession that many say ended in the second quarter the longest since World War Two.

The recovery is now expected to be more robust than economists predicted last month, when they saw growth of 0.8 and 1.8 percent in the third and fourth quarters, respectively. The broad U.S. stock market is up 50 percent from March lows.

High unemployment, which the poll showed topping out at 10 percent, and a massive debt load on the shoulders of consumers will hamstring the economy after the initial rebound.

This will keep inflation largely in check and official interest rates low, while economists still see a 25 percent chance of a double-dip recession.

"Recent data suggest that the economy is near a bottom, but the recovery is likely to prove to be lengthy, gradual, and fragile," said Scott Brown, chief economist with Raymond James & Associates in St Petersburg, Florida.

"Fiscal stimulus should provide support through the end of the year and in 2010. Fed policy will remain supportive."

The government and Fed have pumped trillions of dollars into the economy in economic stimulus spending and intensive care measures meant to revive the moribund financial system, which appeared on the verge of collapse late last year.

The consensus prediction of a peak unemployment rate of 10 percent compares with 10.2 percent in the July poll.

A government report earlier this month showed the U.S. unemployment rate fell in July for the first time in 15 months as employers cut far fewer jobs than expected.

Read the rest of the article

Labels: Across the Curve, bailout, economic indicators, financial crisis, GDP

 

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8/20/2009 03:10:00 PM