Most Economists Say Recession is Ending

Most economists believe the recession is either ending or has already ended, according to a leading survey of private economists released this morning.

Eighty-seven percent of the economists responding to the monthly Blue Chip Survey of Economic Indicators said they believe analysts will eventually conclude that the recession ended sometime before the end of this quarter. However, two-thirds said they expect the recovery to be a slow one, with weak economic growth for about another year. The survey follows Friday's report from the Commerce Department showing a big drop in job losses in July, which fell to 247,000, down for 433,000 in June. The overall unemployment rate also declined slightly, to 9.4 percent, down from 9.5 percent in June, as some unemployed workers gave up active job hunting during the summer months.

However, the economists in the Blue Chip survey tended to believe the improved labor news was just temporary, predicting that unemployment will remain high through the end of next year, after topping out around 10.2 percent. It appears the economists put more stock in other recent economic news, including rising home prices and a positive index of leading economic indicators.

Employment is commonly one of the last things to improve following a recession, lagging behind as other parts of the economy pick up steam.

A weak economic recovery is often described as "U-shaped," describing how economic activity would appear on a graph, with the curve slowly bottoming out and then rising, which is what two-thirds of the 51 economists surveyed predicted. One sixth forecast a "V-shaped" recovery, where the economy turns around and rises quickly after bottoming out, which often happens following severe downturns.

Another one-sixth took a more pessimistic view, predicting a "W-shaped" recovery, where the economy will pick up steam for a number of months, then go into another downturn before a more sustainable recovery gets underway.

Overall, the economists predict the nation's gross domestic product will shrink by 2.9 percent this year, then rebound weakly with a 2.3 percent increase in 2010.