Forecast: Weak Growth Nationally in 2011

Forecast: Weak Growth Nationally in 2011, Indiana May Perform a Bit Better November 4th, 2010 Indiana University economists presenting their annual forecast expect that the current historically weak recovery will continue into 2011, with continued challenges for the national labor market. “The past year has been one of disappointingly weak recovery, and, sadly, we expect that 2011 will bring more of the same,” concluded Bill Witte, associate professor emeritus of economics at IU and a member of the Kelley School of Business’ annual Business Outlook Panel. “The watchword for the economy going into the New Year is uncertainty — uncertainty about the political climate; uncertainty about taxes; uncertainty about commodity prices; uncertainty about Fed policy and interest rates; uncertainty about the dollar,” Witte added. “Until some of this uncertainty is removed, the prospects for a robust recovery will remain dim.” Witte, who also co-directs the Center for Econometric Model Research at IU, remarked that the U.S. economy has been a model of “diabolical consistency.” In 2008 and the first half of 2009, it produced the worst recession since the Great Depression. Since then, it has produced the worst recovery since World War II. Over the five quarters since the economy hit bottom, total growth has totaled only 3.5 percent. By the declared end of the Great Recession in June 2009, private sector employment had shrunk by 6.1 percent (more than 7 million jobs), and it continued to decline after recovery began. He said the recovery also seems to have lost momentum. The Kelley School panel said the economy overall will expand at about a 3 percent rate in 2011, between the fourth quarters of this year and the next. “This will be a little better than 2010, but not enough to make much progress against the damage done during the recession,” Witte said. This is a much more sluggish recovery than typical after past recessions. While [...]