NABE: Deficit Trumps Unemployment as Top Worry

Washington, DC, Nov. 23, 2009--The November outlook by the National Association for Business Economics shows economists expect net employment losses to bottom out in the first quarter of next year. Employers are seen starting to add to their payrolls after that.

"While the recovery has been jobless so far, that should soon change," said Lynn Reaser, NABE's president and chief economist at Point Loma Nazarene University.

"Within the next few months, companies should be adding instead of cutting jobs."

But even if companies do start restaffing next spring, they aren't expected to ramp up hiring very quickly. Some 7.3 million jobs have been lost since December 2007, according to NABE.

Of the 48 panelists surveyed, 61 percent do not expect a complete recovery of those lost jobs until 2012. And they expect the unemployment rate will remain "stubbornly high," averaging 9.6 percent in the fourth quarter of 2010.

Panelists ranked high unemployment as their second biggest concern over the next five years, expressing "extreme concern" first and foremost about the federal deficit.

Those surveyed expect inflation will remain low and the dollar to remain weak, though they see it strengthening against the euro and continuing to be a major reserve currency.

The latest survey by NABE notes that sluggish consumer spending will continue to weigh on the economy.

Economists polled in the survey predict 3 percent real GDP growth in the 2009 fourth quarter, and 3.2 percent growth for all of 2010. For the two years combined, the projected growth is half a percentage point higher than the forecast NABE gave 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," NABE forecasters predict.

Those surveyed say the housing recovery will gather momentum, helped by low interest rates, with housing starts expected to jump 36 percent and residential investment climbing 9 percent next year.