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Severe Recession to Extend Through Mid-2009, Followed by Slow Recovery According to BNA’s Annual Survey of Economists

NEWS RELEASE

Contacts:
Karen James Cody,
703-341-3476

Arlington, Va. (Dec. 31, 2008) – Economists surveyed by BNA expect the recession to be one of the worst in post-war history, lasting until at least mid-2009. The downturn will be marked by heavy job losses and cuts in consumer spending and business investment. The gradual resumption of growth starting in the third quarter is likely to hinge on the success of the federal government’s massive economic stimulus and financial intervention efforts.

The 25 economists who participated in the BNA study are from financial institutions, consulting firms, and academia. They were interviewed between Dec. 1 and Dec. 8, 2008.

Highlights of the report include:

U.S. Economy

• Year-old recession will continue for another six months, making it one of the longest and most severe in post-war history.
• Key underpinnings of the recovery in the second half of 2009 will be federal economic stimulus and resolution of the financial crisis.
• Major risks to the economy include uncertainty about the extent of bad investments in mortgage and other securities.

Labor Markets

• Payroll losses will average 218,200 jobs per month in the first six months of the year, slowing to 41,700 jobs per month in the second half of 2009.
• Unemployment rate will rise to 8.2 percent in the second half of the year.
• Turnaround in the labor market will be later than that of the overall economy, as employers wait for evidence of growth.

Monetary Policy

• Fed will maintain historic low target for key interest rate before raising it toward the end of 2009.
• Inflation will be relatively low over the year, and core inflation will slow.
• Central bank is widely expected to pursue financial lending and monetary stimulus initiatives.

World Economy

• Financial crisis is considered the most serious since the 1930s, while the global economic downturn compares to that of 1982.
• Averting a worse downturn will depend critically on stimulative policies, with more fiscal stimulus needed in industrial and developing countries.
• Emerging markets will continue to grow but at a much slower pace, contradicting the idea that they are independent from the industrial countries.

For press copies of the full Economic Outlook or to interview a BNA analyst, contact Karen James Cody at (703) 341-3476 or (301) 452-4469.

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BNA (www.bna.com) is the leading independent publisher of print and electronic news, analysis, and reference products for professionals. Delivering specialized information to business, legal, and government professionals at every level of expertise, BNA produces more than 300 news and information services, including the highly respected Daily Labor Report, U.S. Law Week,and Daily Report for Executives.

Aaron Lorenzo  covers financial services for BNA, reporting on economic policy and the Federal Reserve for the Daily Report for Executives, Daily Tax Report, Daily Labor Report, and BNA’s Banking Report. His coverage includes financial institutions, the $700 billion economic rescue bill, and other stimulus packages being rolled out by the Treasury Department, Congress, and the incoming Obama Administration.

Michael Rose focuses on labor economics for Daily Labor Report and other news services at BNA. His coverage includes trends in the labor markets, collective bargaining and union contracts, particularly in the railroad industry, and workplace immigration issues such as H-1B visas and worksite raids.

Diana I. Gregg is an Economics Editor for BNA.  She focuses on economic policy and international finance and development for BNA’s Daily Report for Executives, Daily Tax Report, Daily Labor Report, and BNA’s Banking Report. Gregg tracks macroeconomics and the activities of the IMF, the World Bank, and the Millennium Challenge Corporation.