This won't be the deepest economic downturn since the Great Depression, but it will be the longest recession and recovery period, predicts University of Central Florida economist Sean Snaith.
In fact, rather than a U-shaped recovery touted by some, Snaith envisions the many months of gradual emergence from the recession will more resemble a gravy boat. "After touching bottom in the third quarter of 2009, we'll see GDP slowly climb like a gravy boat's spout," Snaith said in his quarterly economic forecast released Wednesday.
(For his Florida-centric readers, the UCF economist offers this alternative economic recovery metaphor: the gradually curved angle of the basket used to play Jai Alai.)
Snaith said he's encouraged by upward trends in the stock markets, in income levels and construction spending. But the core problem of a skittish consumer will haunt us for a while.
"Consumers may soon be back from the dead," he said. "But as any aficionado of zombie movies knows, the living dead do not move very fast. Consumers may start spending again, but they will not be the driving force pulling out of this recession."
Among his predictions:
• Unemployment (currently at 8.9 percent nationally and 9.6 percent in Florida) will peak nationally just above 10 percent next year and remain in the double digits throughout 2010. It will slowly decline to 8.2 percent by the end of 2012.
• Housing starts will rise slowly after hitting bottom this current quarter, remaining under 1 million starts through 2010. It will take until 2012 for housing starts to reach 2001 levels.
• Over the next three years, the national debt will increase by more than $4.5 trillion as budget deficits pile up. That means the debt would stand at $15.5 trillion by 2012, or nearly 100 percent of the country's estimated GDP that year.
• Residential real estate may be poised for slow recovery, but there's more pain to come in commercial real estate. Construction spending will decline on average about 18 percent through the first half of 2010 because of rising unemployment and consumer retrenching.
• The strengthening of the U.S. dollar against many of our trading partners should reverse course as we head into 2010 and beyond.