Economy looking up for ’09, say experts

U.S. economic growth will be subdued this year, but the economy will begin to pick up in 2009, according to the SIFMA Economic Advisory Roundtable.
JUN 24, 2008
By  Bloomberg
U.S. economic growth will be subdued this year, but the economy will begin to pick up in 2009, according to the Securities Industry and Financial Markets Association’s Economic Advisory Roundtable. “The round table expects economic growth … to be subdued for full-year 2008 at about 1.5%, and then begin to pick up [in] the latter part of 2009 and be 1.8% for full-year 2009,” said Steve Davidson, managing director for capital markets research for SIFMA of New York and Washington. He spoke at a press briefing held today in SIFMA’s Washington office. Continued housing sector contraction, tight financial conditions, rising commodities prices, central-bank actions’ adding liquidity to the financial system, and the government’s economic-stimulus program are the underlying conditions that are expected to lead to the forecast. The pace of housing starts is expected to become steady at the current level, which will contribute to the modest improvement next year, said Jim Glassman, senior economist at JPMorgan Chase & Co. of New York. “The drag from the housing industry will start to fade if housing activity stays here at this 1 million-level housing start,” he said. The round table also forecast that inflation will settle back down toward core inflation, Mr. Glassman said. “We’re all assuming that the run-up in oil prices will stabilize,” he said. The group also expects the economy to get support from Federal Reserve interest rate policies. If the economy starts to do better next year, the Fed is expected to raise interest rates “carefully” starting next spring, Mr. Glassman said. The round-table members comprise economists for SIFMA member brokerage firms.

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