Next year will not be much of an improvement over this one if a large group of prominent economists is to be trusted. The Research Seminar in Quantitative Economics at the University of Michigan poll shows expectations for better GDP and employment numbers in 2011 are depressed.
“We expect the sluggish pace of economic recovery that characterized the past two quarters will continue in the near term, with real GDP growth of 1.9 and 2.2 percent in 2010q4 and 2011q1, respectively,” the group said in its new report.
“The economy gains some momentum by the middle of next year and accelerates during 2012. Real GDP growth averages 2.5 percent during the second half of 2011, 3.1 percent during the first half of 2012, and 3.4 percent during the balance of that year.”
“The unemployment rate changes little during 2011, but declines steadily during 2012. The jobless rate averages 9.6 percent next year, edges down to average 9.3 percent for calendar 2012, and dips below 9 percent by the 2012–2013 turn of the year.”
Many perceptions of the future of the US economy and the American balance sheet get worse by the month. The proposals from the Presidential deficit commission and several rival reports are for sharp cuts in government expenditures, which should hurt employment and GDP, higher taxes, and cuts in social services. These kinds of actions would usually throw a weak economic recovery into reverse.
The stock market continues to disregard most of these negative forecasts and the calls for major modifications in the national budget. The DJIA is higher for the year and the improvement has been capped by a move from 9,687 in July to the current level of 11,181–an increase of 15%.
It appears that the only optimists are in downtown Manhattan.
Douglas A. McIntyre
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