U-M economic forecast: sluggish job growth
The nation's road to economic recovery will be a marathon, not a sprint. That's according to an economic forecast released today from the University of Michigan's Research Seminar in Quantitative Economics.
The economists write the U.S. economy has been battered by an oil price spike this past spring, the Japanese earthquake, and the European debt crisis.
Despite that, they say the chances of a double-dip recession are lessening:
From the report:
Economic news has improved a bit this fall, lessening the chances of a double dip. Output growth rebounded in the third quarter to register a 2.5 percent pace. Job gains have picked up a notch, averaging 117,000 since midyear. Consumer sentiment has reclaimed part of the ground lost since May. The economy remains vulnerable, however, as the main problems that have plagued this recovery persist.
The Detroit Free Press quoted U-M economist Joan Crary about the slow addition of jobs to the U.S. economy:
On the positive side, the U.S. economy added 700,000 jobs last year and 1.5 million this year, and the U-M economists predicted that the nation will add nearly 4 million jobs over the next two years.
But that will be enough to bring the unemployment rate down only moderately, from its current national rate around 9% to 8.8% in late 2012 and 8.5% in late 2013.
"The unemployment rate begins to creep down but remains uncomfortably high even at the end of 2013— 4½ years after the official end of the recession," Crary said.
In their report, the U-M economists noted the potential impact of a political stalemate in Washington D.C.:
In the current political environment, it also seems unlikely that Congress will pass any new stimulus measures. We have assumed the payroll tax holiday and investment tax incentives will be held over for another year, but neither of those extensions is a sure thing. We may well end up with a fiscal policy that doesn’t address either our short- or long-term problems.
The group is expected to put out a report on Michigan's economy tomorrow.