Struggling to climb out of recession

Recovery from this recession is even more painful than it appears. The employment numbers for December, an unexpected reduction of 85,000 jobs, is a clear sign that this recovery will not be a smooth ride. Less noticed was the unusually large downward adjustment the U.S. Government made to its advance estimate of Q3 output, from 3.5 percent to 2.2 percent. This indicates that the recovery did not really get going until Q4 of 2009; we have accordingly raised our GDPgrowth forecast for that quarter to 4.9 percent. In Q1 2010, we forecast significantly slower growth due to the waning effect inventory depletion and a lack of significant acceleration in consumption, capital spending or exports. We expect further slowing in growth (“a double dip”) in the second half of 2010. This does not portend another recession, but rather the start of a lengthy period of slow- to moderate growth with significant volatility on a quarter-to-quarter basis.

source: The Conference Board

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