NABE Sees Economy Stabilizing This Year

Washington, DC, July 20, 2009--The U.S. economy should stabilize in the second half of this year, but a robust recovery is unlikely and job cuts are likely to continue, according to the latest survey from the National Association for Business Economics.

However, when it comes to conditions in their own firm or industry, a slight plurality of NABE members thinks the worst is already over.

According to the quarterly survey of 102 NABE members, released Monday, 45% of respondents said sales hit their cyclical low in the first half of 2009 or before. A slightly smaller share, 41%, peg the trough at the second half of 2009. Only 14% expect the low point to be in 2010.

The survey was conducted between June 19 and July 1.

The industry demand index improved nine points in the July survey to -5. The percentage of respondents reporting lower demand slightly outpaced those reporting increases. Still, the 31% that reported falling demand was the lowest since the July 2008 survey, before the collapse of Lehman Brothers accelerated the recession.

"Industry demand was still declining in the second quarter of 2009, but the breadth of decline had narrowed considerably since late 2008, raising prospects for stabilization in the second half," said NABE member Sara Johnson, an economist at IHS Global Insight.

Meanwhile, inflationary pressures appear nonexistent. The prices charged index slid deeper into negative territory at -13. "This weakness in pricing power probably reflects the aggressive efforts of firms to reduce inventories," NABE said.

NABE economists expect employment cutbacks to continue, albeit at a slower rate than in recent quarters. The employment outlook index rose seven points from April to -10.