SAINT LOUIS--The recession, which began in December 2007, has ended but the nation still faces a long slow recovery, according to economists surveyed by the National Association for Business Economics.

More than 80% of respondents to the quarterly NABE survey said they believe an expansion has begun. The survey was  released Monday at the Association’s annual meeting here in St. Louis.

“The good news is that this deep and long recession appears to be over, and with improving credit markets, the U.S. economy can return to solid growth next year without worry about rising inflation,” according to Lynn Reaser, chief economist at Point Loma Nazarene University and NABE President-elect.

Even with the recovery, the NABE panel forecast the unemployment rate to increase to 10% in the first quarter of 2010 from the current 9.8% and to edge down to 9.5% by the end of the year.

Almost all of the panelists (92%) said it would take until at least 2012 to recover all of the jobs lost in the recession. The majority of respondents – 54% -- said the jobs lost in the recession – 7.2 million through the employment report for September – would not be recovered until 2012; 33% said the job losses would not be recouped until 2013 and another 5% said it would take even longer.

The start and end date of recessions – technically the top and bottom of a business cycle – is determined by the Business Cycle Dating Committee of the National Bureau of Economic Research. The peak of the cycle would mark the start of a downturn and the bottom the beginning of a recovery.

The NABE forecast panel, Reaser added, said while the recovery has begun, it will be “more moderate than those typically experienced following steep declines,”

NABE forecasters, she said, expect the nation’s Gross Domestic Product to increase at about a 2.9% annualized rate in the second half of the year after experiencing declines of 6.4% and 0.7% in the first and second quarters. GDP has declined for sour consecutive quarters for the first time since 1938.

Inflation, the economists said in the survey, would remain contained throughout 2010.

The survey respondents said the recovery would come from increased business investment and strong improvement in corporate profits.

The housing recovery, respondents said “will gather momentum” with housing starts growing 38% and residential investment 8% from current “depressed levels.”  The panel said 2010 will be the first year since 2005 that the housing sector will contribute to overall growth.

After bottoming out this year, house prices, they said, would see a “modest gain of 2% in 2010. About two-thirds of respondents said bottom in 2009.

But even with the “good news” in the survey, the survey results offered some cautions:

Slow growth of household sector spending is expected to be a drag on the economy, as the lagged effects of past wealth losses and modest employment gains restrain consumer spending growth. Personal consumption expenditures, which are expected to turn up in the second half of this year, grow a sub par 1.6% next year.

The saving rate would “rise dramatically over the next few years,” according to slightly more than one-half of the forecast  who said the saving rate will average between 3 and 5% through 2012; another 40% believe it will average between 5 and 7.

Auto sales, the survey panel said, would remain weak. After plunging to a 40-year low of 10.3 million vehicles in 2009, next year’s projected sales, the forecasters said, would claw back to about 12 million, about 75% of what it was in 2007.

The anticipated low inflation rate, the survey said, coupled with a weak labor market “will mute gains in labor compensation.”

The NABE panel forecast the Federal Open Market Committee would keep the target Fed Funds rate in its current range – 0 to 0.25% -- until late spring 2010 and the rate would be at about 1.0% at the end of the year.

In determining the start and end dates of recession, the NBER committee looks for turning points for five factors: employment, personal income (excluding government payments), industrial production and manufacturing wholesale and retail sales. The committee also looks at a monthly estimate of GDP (reported quarterly by the government) prepared by a private economic forecasting firm.

Mark Lieberman is the senior economist for the Fox Business Network. Prior to joining FOX, he served as first vice president and manager of economic analysis and research at Washington Mutual in New York. Before that, he served as senior vice president at Dime Savings Bank of New York (which was later acquired by Washington Mutual), where he specialized in credit and risk management. He is a member of the Executive Committee of the New York Association for Business Economics. He has a degree in Economics from the Wharton School of the University of Pennsylvania.

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