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Recovery to remain sluggish into 2011
Published in The Egyptian Gazette on 12 - 04 - 2010

WASHINGTON ��" The pillars of Americans' financial security ��" jobs and home values ��" will stay shaky well into 2011, according to an Associated Press survey of leading economists.
The findings of the new AP Economy Survey, released on Monday, point to an economic recovery that will move slowly and fitfully this year and next. As a result, the Federal Reserve will be forced to keep interest rates near zero until at least the final quarter of this year, three-fourths of the economists said.
The new AP survey, which will be conducted quarterly, compiles forecasts of leading private, corporate and academic economists on a range of indicators, including employment, home prices and inflation. Among the first survey's key findings:
• The unemployment rate will stay stubbornly high the next two years. It will inch down to 9.3 per cent by the end of this year and to 8.4 per cent by the end of 2011. The rate has been 9.7 per cent since January. When the recession started in December 2007, unemployment was 5 per cent.
• Home prices will remain almost flat for the next two years, even after plunging an average 30 per cent nationally since their peak in 2006. The economists forecast no rise this year and a 2.3 per cent gain next year.
• The economy will grow 3 per cent this year, which is less than usual during the early phase of a recovery and the reason unemployment will stay high. It takes growth of five per cent for a year to lower the jobless rate by one percentage point, economists say.
The economy began growing again last summer, 18 months after the recession started. To keep the recovery on track, the soonest the Federal Reserve will begin raising short-term interest rates is the fourth quarter, 34 of the 44 economists surveyed told the AP.
Those continued low rates will help stimulate home sales.
Economists think sales of previously occupied homes, the biggest chunk of the market, will tick up to 5.4 million this year and to 5.9 million in 2011. That would mark continued improvement from the low of 4.9 million in 2008 and be in line with sales in a healthy economy.


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