Economists: Recession to end in third quarter - East Bay Business Times:

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The committee cited consumer spending stabilizingh in the first half ofthis year, allowin g businesses to reduce costs and as well as reducing layoffs and investment spendinh cutbacks. In combination with the stimulusw and an improvement in thefinancial markets, it is likel y the economy will expand in the secondx half of the year. Bruce Kasman, committee chairmam and chief economist forNew York-based (NYSE: JPM), said the economhy will return to growth, but not health.
“Growtgh in the coming quarters is likely to gather momentum but will not prove sufficiently robust to undo much of the severe damagr done to our labor marketsz andpublic finances,” Kasman said in a news For the third quarter, the committee forecaste inflation-adjusted gross domestic product will returm to positive growth, picking up to a more than 3 percenyt pace by the second half of 2010. Tom Traynor, economicsa professor at , said the committee’s forecasts are in line with otheres that economists haveput together.
He said most believe the recessionj will end either in the third quartert or fourth quarter ofthis year, with a few projectinhg it won’t be until the firsg quarter of 2010. Also, the committee is projecting an end tothe three-yeat downturn in the housiny market, with housing starts rising latefr this year and home values moving up modestly in 2010. “Lower prices and low mortgager rates have greatly improved the affordability of Kasman said. “A recovery in the housing sector will be an importantg contributor toeconomic growth.” However, credit will remaim tight and bank economists said jobs will continude to be lost.
Unemployment is expecterd to peak at 10 percent nationally and remainh at orabove 9.5 percent through next year. Budget deficits are expecteds to remain wellabove $1 trillion this year and next The 13-member committee forecasts the 10-yead Treasury bond yield will stay in the 3.75 percenty to 4.25 percent range through next year because core inflatioj is forecast to fall towards 1 percent. the committee is concerned about the risinhg trend in federal debt and the implications for inflation riskbeyone 2010.