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- EMAIL NEWSLETTER
University of Michigan economists say recession won't bottom out until mid-2009
by Stefanie Murray | The Ann Arbor News
Thursday November 20, 2008, 9:42 AM
• Read the executive summary of the report
The U.S. economy is in a moderately severe recession that won't bottom out until midway through 2009, University of Michigan economists said Thursday, meaning things could get worse before they get better.
Even then, growth going forward into 2010 will be modest, with the nationwide unemployment rate hovering around 8 percent.
The predictions come out of the university's annual forecast of the U.S. economy, released Thursday morning at the U-M's 56th annual Economic Outlook Conference.
Economists Joan Crary, Stanley Sedo and Janet Wolfe also predict the country will lose about 2.4 million more jobs over the next year and a half. And even if a significant fiscal stimulus package is put in place in early 2009, the country's real gross domestic product - a key economic indicator - will still fall by 1 percent in 2009 and 2 percent in 2010, the group said.
The housing market will continue to be sluggish, too. The economists forecast housing prices will fall 14 percent this year and 6 percent in 2009. The economists said sales of light vehicles will continue to fall in 2009, hitting a 25-year low.
Oil prices, which have been drastically falling over the past few weeks, will stabilize a under $60 a barrel next year. As gas prices drop along with the price of oil from their 2008 summer peak, that stabilization is expected to save consumers $180 billion.
"Overall, the outlook is extremely uncertain, but any improvement clearly hinges on the return of a functioning credit market," Crary said in a statement. "Fortunately, economic crises of this magnitude are rare."
Crary also said the U-M economists expect the fiscal policies put into place to address the current economic crisis will be successful.
The credit crunch, housing crisis and high oil prices made 2008 much worse than the U-M economists predicted it would be last year, Crary told about 100 people at the conference this morning, held at U-M's Rackham building.
Crary said she never expected her field to be one for "adrenaline junkies."
And although the current economic environment is certainly the most challenging she has ever worked in, Crary said, the catastrophe is not as bad as the crisis of the late 1970s and early '80s.
News staff reporter Tina Reed contributed to this story.
"And although the current economic environment is certainly the most challenging she has ever worked in, Crary said, the catastrophe is not as bad as the crisis of the late 1970s and early '80s."
Oh, fgs, that makes me feel better, NOT.
I was in the workforce of the late 70's and early 80's
I was laid off from my job three winters in a row for 3- 6 months at a time. I found work but it was only temporary until the next winter. It wasn't easy or pretty, but many of us have been through this before. It will get better, but it will take some time.
Thanks, coasterbrake. I wasn't in Michigan then, I was doing great at that time. 1982-'84 was particularly good in my business.
the economists couldnt predict this coming, what makes them smart enough to predict the end?
Isn't this the same bunch who forecasted Michigan's economy would begin to recover in spring of 2005?
Yeah, but what about the local economy. Went to the Mall this afternoon, and business seemed a little brisk. I can count in my mind, at least 15 or so major construction projects going on.
I have done extensive analysis of Michigan's economy and predict it will bottom out sometime in 2015 and have a per capita income of somewhere around what a typical resident of Cameroon has currently. At that time a mobile home will have greater value than my house due to its ability to move to another state.
I agree with ez1251--economists are morons with a PHd. A PHd is an award for being able to be unproductive for a significant portion of your life. If they're so smart where were they when they were needed. We don't need some classroom nerd with no common sense telling us what we already know. Listening to an economist is like reading a horoscope--you can read it anyway you want--and most people do.
We should all take time to thank the Republican party for absolutely destroying our nation's economy. I hate to say I told you so, but I'll say it anyway, I told you so.
eIther way this just sucks i hate how my life style(which isnt that high or grand) is held by the goverment ..gas... food... housing... ect the so called leaders think ("everything is fine ") need a wake up call... which won"t happen because of theIr life style is in the 6 figure range and they had investments and enough money extra to tuck away for any hard times they or theIr friends have
...the USA needs to start taking care of itself ...no more funds to other countries to take care of the hungry or sick.......... PEOPLE WAKE UP we had better start worrying about US the UNITED STATES OF AMERICA WELL NOBODY ELSE WILL - NOT EVEN OUR GOVERMENT ......try to have a nice day and in closing if the top 3 fail the foreclosure rate and repossession rate will go through the roof ! The bank will hold all the houses and all the car loans, therefore leading to them failing due to no money coming in......... hmmmmm thanks high gas prices for creating the failure of the USA
We can all move on to bigger and more important issues. rarules with his amazing deduction abilities has uncovered the cause of all our problems. Next he will be uncovering the secret behind how that ship got inside that little bottle.
Look to the left, under business news:
BERLIN (AP) — The German economy could lose up to 215,000 jobs in 2009 amid the global economic crisis, Germany's Bild newspaper said Friday, citing a survey it compiled.
The report, which surveyed unions, trade groups and economic experts from 15 branches of the economy said between 50,000 and 100,000 jobs in the auto industry alone are threatened.
The logistics and delivery industry is also facing a projected loss of 40,000 jobs next year according to the German Association of Transport, the report said. Also threatened were the building, retail, banking and insurance sectors.
PARIS (AP) — French consumer spending, the main driver of growth in the euro zone's second-largest economy, fell abruptly in October, suggesting France may yet follow its neighbors Germany and Britain into recession.
We're not alone.
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