Economists See Short, Shallow Recession

Washington, DC, May 19, 2008--National Association for Business Economics says the economic downturn is likely to be eventually declared a recession even though it will be short and not very deep.

The organization's latest survey of members also predicts a slow recovery.

"Although housing and credit markets will gradually lose their grip, U.S. economic growth is expected to only slowly return to health,' said Ellen Hughes-Cromwick, NABE president and the chief economist at Ford.

The NABE members forecast median GDP growth of 0.4 percent in the second quarter after two quarters at 0.6 percent.

More than half of the NABE economists, 56 pecent, think the current downturn will go down officially as a recession, despite the lack of any negative quarterly GDP numbers. That's up from 45 percent from February.

The median forecast is for 2.1 percent growth in the second half of the year, down from 2.8 percent in February, followed by a 2.7 percent GDP increase in 2009.

The NABE survey panel expects a 3.1 percent rise in the headline Consumer Price Index year over year.

NABE's panelists give housing weakness most blame for the slump, followed by the credit crunch and high food and energy prices.

They expect new and existing home sales to finally stop falling, although they're divided on which quarter.