The US economy is set to contract sharply in the first quarter,with the current cyclical downturn on track to rival the 1973-75 slump as soaring unemployment depresses demand,a survey showed.
However,a survey of 47 professional forecasters released by the National Association of Business Economists on Monday predicted the recession-hit economy would begin to recover in the second half of this year,returning to a potential growth trend in 2010.
The recovery was seen driven by the Obama administration’s $787 billion economic stimulus plan,the group said.
“The steady drumbeat of weak economic and financial market data have made business economists decidedly more pessimistic on the economic outlook for the next several quarters,” said NABE President Chris Varvares.
“The good news is that economic activity is expected to turn up in the second half of the year and 2010 is expected to see modestly above-trend growth of 3.1 per cent,” Varvares said.
The survey,conducted between January 29 and February 12,forecast real gross domestic product would shrink by an annualized rate of 5.0 per cent in the first quarter,moderating to a 1.7 per cent contraction in the second quarter.
The economy was expected to expand by 1.0 per cent in the third quarter,with growth quickening to 2.1 per cent in the final three months of the year,the poll respondents said.
Advance government estimates showed GDP shrank at a 3.8 per cent annual rate in the fourth quarter,but this figure is likely to be revised to show a bigger contraction when preliminary figures are released on Friday.
In November,the NABE survey had forecast first-quarter GDP sliding at an annual rate of 1.3 per cent,before rising by an anemic 0.5 per cent in the second quarter.
The US economy tipped into recession in December 2007,triggered by the collapse of the domestic housing market and the accompanying global credit crisis.