The latest poll from The National Association of Business Economists is remarkable in both its optimism and its lack of any grasp of the serious problems the economy faces.
According to Reuters, the group predicted "that real gross domestic product was expected to fall 2.6 percent in the fourth quarter and slump 1.3 percent in the first three months of 2009." In other words, the this quarter of next year will be the low point for the economy.
The poll also shows that most of those surveyed believe that unemployment will peak at 6.5% sometime toward the end of next year. That mean that the economy would lose only another 1 million to 1.5 million jobs.
None of those predictions are likely to be true. With no evidence of a housing bottom and with huge lay-offs at many large companies which are probably being matched or bettered among small businesses, the jobless rate could easily be 8.5% to 10% a year from now. The GDP contraction bottom is likely occur well into next year and last several quarters as the economy is faced with potential car company bankruptcies, more bank failures, and retail spending which should continue to dive well after the holidays.
Once more economists have been laid-off their views may change. They probably don’t survey the ones out of work which may be why the numbers are off.
Douglas A. McIntyre
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