By: Chavon Sutton
February 22, 2010
NEW YORK (CNNMoney.com) -- Leading economists are upbeat about the U.S. recovery, forecasting steady growth over the next two years as businesses grow and jobs return, according to a survey released Monday.
"We see a healthy expansion under way, although it will take time to reduce economic slack and repair damaged balance sheets," said Lynn Reaser, president of the National Association for Business Economics, which conducted the survey of 48 top economic forecasters in late January and early February.
The NABE panel says it "expects the recovery to remain firmly on track." Its forecast is for the economy to grow 3.1% in both 2010 and 2011, an estimate that is essentially unchanged from the 3.2% target in NABE's November survey. The group's estimate is a marked improvement from last year's survey, which had forecast that the economy would contract.
Most economists surveyed expect the recovery to be led by businesses. The NABE estimates that corporate earnings will grow 15% this year, which will spur hiring and ultimately bolster household spending.
"Businesses are in position to take up some of the slack because of rebounding profits," said Reaser, who is also chief economist at Point Loma Nazarene University. "Our economists believe improvement in sales and profits will cause them to put out the hiring signs relatively soon," said Reaser.
The NABE panelists expect that jobs will return slowly this year, forecasting an average monthly increase of 50,000 jobs in the first quarter, followed by average monthly job gains of 103,000 the rest of the year. The unemployment rate, which now stands at 9.7%, is expected to tick down to 9.6% by the fourth quarter.
As jobs return, so will consumer spending, which should rise by 2.2% in 2010 and then climb 2.8% in 2011. These relatively small gains can be attributed to the fact that Americans are still feeling financially conservative.
"Overall, our economists believe we are on a fairly healthy growth track and their will be no double dip recession," said Reaser.