Economic forecast darkens

WASHINGTON — Job growth is faltering, consumer confidence plunging, fallout from the worst housing slump in a quarter-century growing. Wherever you look, the signs are unmistakable that the economy is in trouble.

And more and more economists foresee the country falling into a recession, according to the latest survey by the National Association for Business Economics.

NABE said in a report being released today that 45 percent of the economists on its forecasting panel expect a recession this year — some say we are already in one. In September, only one in four economists was pessimistic enough to put the chance of a recession at 35 percent or higher.

Mark Zandi, chief economist at Moody's Economy.com and a NABE panelist, said he believed the economy entered into a recession in December and it will pull out of the downturn in June, aided by $168 billion in federal rebate checks that begin going out to millions of families in May.

If problems worsen for the financial industry, hard hit by the housing downturn, then Zandi said Washington will rush through a second rescue measure.

"A recession in an election year represents a problem for incumbents," Zandi said. "That is why the first stimulus package got passed so quickly and that is why I expect more of a policy response before this is all over."

A second panel member, David Wyss, chief economist at Standard & Poor's in New York, also believes the country is now in a recession. While he believes the economic aid plan signed by President Bush should make the downturn a mild one, he worries the economy could falter again next year.

"There is a danger that this could turn into a double-dip recession," he said. "Once the rebate checks are spent, we could go back down again."

The drumbeat of bad news since last fall has caused many analysts to consider a recession more likely now, said Ellen Hughes-Cromwick, chief economist at Ford Motor Co. and NABE's current president.

The survey shows that 55 percent still believe the country will be able to skate by without falling into an actual downturn, typically defined as two consecutive quarters of declines in the gross domestic output, the broadest measure of economic health. All the analysts, however, expect growth to slow considerably this year.

The forecasters believe GDP will expand by 1.8 percent this year, which would be the weakest growth in five years. That compares with an estimate of 2.5 percent growth for 2008 made in the previous survey, in November.