The worst US recession since the Great Depression has ended, but weak household spending as the labor market struggles to create jobs will slow the pace of the economy's recovery, according to a survey released today.
The survey of 44 professional forecasters released by the National Association of Business Economists found that 80% of the respondents believed the economy was growing again after four straight quarters of declines.
The study also found that the more-than-three-year downturn in the US housing market, epicenter of financial turmoil that slammed the brakes on growth, was very close to ending, with an upturn expected next year.
According to the survey, the key areas of concern were the increasing federal debt and unemployment rates, 'expected to remain very high through next year'.
'Back from the abyss', Summers says
Earlier today, President Barack Obama's top economic adviser also said the US is on the path toward economic recovery.
Larry Summers said that conditions in financial markets are steadier and there have been initial signs of stabilisation in the housing market.
'Thanks largely to the Recovery Act, alongside an aggressive financial stabilisation plan and a program to keep responsible homeowners in their homes, we have walked a substantial distance back from the economic abyss and are on the path toward economic recovery,' Summers said in a letter to be sent to Republican House Leader John Boehner. The letter amounted to a defence of the Obama administration's policies on the economy.
Obama is facing rising clamour to take new steps to lift the economy and jumpstart job growth, as US unemployment edges toward 10% and the country faces soaring budget deficits.
'Most importantly, we have seen a substantial change in the trend of job loss,' the letter continued.
The US economy lost jobs at a monthly average rate of 256,000 in the third quarter of 2009, which Summers termed 'unacceptably high'. But he noted it was only about a third of the pace of job losses of two quarters ago.
