Economists expect high unemployment that has limited the U.S. economic recovery to slowly decrease in 2010, but they predict consumer spending will remain weak, according to a survey released Monday. While several signs have pointed to the end of the recession, unemployment remains high. The unemployment rate jumped to 10.2 percent in October, the highest in more than 26 years. The November outlook from the National Association of Business Economists (NABE) showed economists expect unemployment to peak in the first quarter of 2010, with employers starting to hire new workers after that. “While the recovery has been jobless so far, that should soon change,” said NABE president Lynn Reaser. “Within the next few months, companies should be adding instead of cutting jobs.” But even when companies start hiring next spring, they are not expected to hire very quickly. About 7.3 million jobs have been lost since the beginning of the recession in December 2007, NABE said. Sixty-one percent of the survey's respondents do not expect a complete recovery of those lost jobs until 2012, and they expect the unemployment rate will stay “stubbornly high,” averaging 9.6 percent in the fourth quarter of 2010. Respondents said high unemployment was their second-biggest concern over the next five years, expressing “extreme concern” first with the massive federal budget deficit. The respondents expect inflation to remain low and the U.S. dollar to remain weak, though they see it strengthening against the euro and continuing to be a major reserve currency. The NABE survey found that weak consumer spending will continue to limit the economic rebound, but it predicts improvements in housing, growth in business spending as more companies restock inventories, and an increase in stock prices. Economists polled in the survey expect 3 percent gross domestic product (GDP) growth in the fourth quarter of 2009 and 3.2 percent growth for all of 2010. The forecasts are stronger than NABE's predictions in October. “Real GDP growth should also be enough to recover losses from the recession and return output to an all-time high by the end of 2010,” the survey said. Consumer spending gains are expected to be “lackluster,” as workers continue to worry about jobs and investments. Respondents expect a “persistently elevated sense of thrift” as consumers save more. They expect the personal savings rate to average 4 percent next year, the highest level since 1998. Businesses will increase spending, and corporate profits are expected to gain 12.4 percent in 2010, the NABE survey found. Stock markets are expected to grow next year, with the Standard & Poor's 500 index expected to rise 9.5 percent in 2010.
