Econimists See Slow Recovery
2009-10-26 Mike Scorelle

Economists speaking during the first general session of the 15th Annual ABS East Conference in Miami Beach gave a generally positive outlook for 2010, however tempered by slow growth.

Beth Ann Bovino, Senior US Economist for Standard & Poor’s, said that they believe the recession is ending and that this has been the most severe recession since the end of World War II.

Bovino offered GDP projections of -2.8 percent, 1.8 percent and around three percent for 2009, 2010 and 2011 respectively.

Ulrik Bie, Chief Analyst at Nykredit, predicted similar GDP numbers with a decline of 2.7 percent for 2009 followed by slow growth of 1.6 percent for 2010 and between two and 2.5 percent for 2011.

“We see much more willingness to save,” Bie noted of the US consumer. That coupled with no real increase in disposable incomes and potentially higher taxes will lead to a slow recovery.

Mark Fleming, Senior Economist at First American CoreLogic said that although he didn’t have specific GDP numbers that he agreed qualitatively with the other two panelist and that the recovery is going to be a “long, slow slog” with curtailing consumption.

On housing, Bovino said that S&P expects housing prices to decline to about 38 percent from the peak with Fleming estimating a 37 percent decline. Both believe that the market should bottom in the beginning of 2010.

Bie said that the housing market is “the most important point” for the Federal Reserve and he believes they will take whatever steps are necessary to correct the market.

None of the panelist are predicting a “V-shaped” recovery in housing or the overall economy with Bovino calling for a “slow U” and Fleming believing in more of an “L-shape.”

The panel was moderated by Standard & Poor’s Chief Credit Officer Mark Adelson.