NABE Panel Sees Prolonged Recession
November 2008
“Business economists became decidedly more negative on the economic outlook for the next several quarters as a result of the intensification of credit market stresses and evidence of spillover to the real economy,” said NABE President Chris Varvares, president, Macroeconomic Advisers. “Following a small contraction in the third quarter of this year, the NABE forecasters expect real GDP to decline at a 2.6% rate in the fourth quarter, implying growth of just 0.2% in 2008. With the recession continuing into 2009, GDP growth next year is expected to be a meager 0.7%. This would be the slowest growth over a two-year period since the early 1980s. The unemployment rate is forecast to rise to 7.5% by the end of next year. Inflation is expected to moderate, as economic slack builds and as oil prices are forecast to remain relatively contained.”
Highlights
- The NABE panel dramatically trimmed growth expectations for both the remainder of this year and 2009.
- A dimmer outlook for consumer spending accounted for most of the downward revisions to the overall economic outlook, reflecting a worse outlook for household wealth and income. For example, the projected value for the S&P 500 index at the end of 2009 was lowered 17%
- 96% of the NABE panelists believe that a recession has begun. Half of the panel estimates that the recession started in the fourth quarter of 2007 or in the first quarter of 2008
- Just over 60% of the NABE respondents expect that the depth of the recession should be relatively contained, with a peak-to-trough decline in real GDP of less than 1.5%, with the balance expecting a harsher contraction.
- The jobless rate is expected to rise to 7.5% by year-end, 2009
- Lower inflation is predicted to coincide with increased economic slack.
The full survey is for NABE Members only- who can view the full survey here.
Not a NABE member? Find out more about NABE.