ANN ARBOR (WWJ) – University of Michigan economists are out with their latest economic outlook — and they’re predicting a slow recovery.
In their annual forecast of the U.S. economy, Crary and colleagues Daniil Manaenkov and Matthew Hall predict economic output growth (as measured by real Gross Domestic Product) of about 2.5 percent in both 2012 and 2013—up from this year’s projected 1.8 percent growth.
WWJ Newsradio 950 spoke with U-M economist Joan Crary who said housing starts will remain relatively slow.
“Things are so bad right now that even with the forecast of improvement that we have, by 2013 we’re still gonna look at a level of house building activity that is lower than anything that we saw in recession, recovery from the mid-50s through 2007,” Crary said. “So, that gives you an idea of how grim the situation still is.”
Crary said the forecast also shows weak recovery in job growth for the next two years.
After enduring the worst back-to-back years of job loss in more than 50 years during 2008 and 2009, the U.S. economy added 700,000 jobs last year and 1.5 million this year. Nearly 4 million jobs will be added over the next two years—1.9 million during 2012 and 2 million during 2013—the economists say.
The unemployment rate, currently hovering around 9 percent, will steadily edge downward to 8.8 percent in late 2012 and 8.5 percent a year later, they say.
“Job gains have picked up a notch, consumer sentiment has recouped about half the ground lost this summer and the chances of another downturn have diminished,” said Crary. “History shows, however, that it is much more difficult to recover after a financial crisis like the Great Recession than it is after a more typical recession, and policymakers are still struggling with ways to restore balance to the economy.
“It seems likely that the path of this recovery will continue to be a marathon, not a sprint.”
A summary of U-M’s U.S Economic Outlook for 2012-2013 is available at this link.