The US economy appears to have weathered the housing and credit crisis but will show sluggish growth for the near future, a survey of business economists showed Monday.
The National Association of Business Economists survey of 52 professional forecasters suggested that the economy will avert a disaster but will remain weak into 2009.
"Although housing and credit markets will gradually loosen their grip, US economic growth is expected to only slowly return to health," said Ellen Hughes-Cromwick, NABE president and chief economist at Ford Motor Company.
"While our panel anticipates an improvement in credit markets and a bottoming out in housing this year, the forecasters have marked down their estimates of growth for both 2008 and 2009."
The NABE panel projects on average gross domestic product growth at a tepid 0.4 percent annual rate in the second quarter, after two straight quarters of output expanding at a 0.6 percent pace.
The panel is still split on whether the current episode will be classified as a recession, which is generally defined as two consecutive quarters of decline but is subject to an official call by an economic panel.
In the NABE survey, 56 percent of the forecasters said a recession has already begun or will develop in 2008, compared with 45 percent in the February survey.
The panel sees GDP growing at an annualized rate averaging 2.1 percent in the second half of 2008, down substantially from the prior survey estimate of 2.8 percent.
The outlook for 2009 was also marked down slightly, with the group seeing growth of 2.7 percent over the course of the year, compared with 2.9 percent in the last report.
The outlook for housing starts was little changed, with starts expected to total 990,000 units in 2008 and 1.12 million in 2009. Home prices are predicted to fall 4.8 percent in 2008 and retreat further by 0.3 percent in 2009..
NABE economists called for a rise in the dollar, projecting the euro to weaken to 1.50 dollars at the end of 2008 and 1.40 at the end of 2009, from a recent April peak of 1.60 dollars.
The economists see the unemployment rate averaging 5.3 percent in 2008 and 5.6 percent in 2009.
Inflation appears to be rising, according to the survey. The panel's estimate for consumer prices calls for a 3.1 percent increase during 2008 compared with the 2.5 percent projected in February. But the economists see an easing of inflation to 2.3 percent over the course of 2009.
For oil, NABE respondents expected an average price of 98 dollars a barrel in December 2008 and 92 dollars in December 2009 -- below current market quotes, but much higher than the figures of 84 and 80 dollars in the last survey.
The consensus of the economists surveyed is that the Federal Reserve will hold its federal funds interest rate target at 2.00 percent this year before raising it to 3.00 percent.
