Good news! The US recession is over

After reeling under a severe recession for two years, the US economy is showing signs of recovery. "The Great Recession is over," according to a survey by the National Association for Business Economics.

The US economy crumbled on the back of the housing market's collapse leading to a global meltdown.

"The survey found that the vast majority of business economists believe that the recession has ended but that the economic recovery is likely to be more moderate than those typically experienced following steep declines. The NABE panel upgraded the economic outlook for the next several quarters, compared with the previous survey," said NABE president-elect Lynn Reaser, chief economist at Point Loma Nazarene University.

"Following a sharp 6.4 per cent (annual rate) contraction in the first quarter of this year and another 0.7 per cent drop in the second quarter, NABE forecasters expect real GDP to rise at an above trend 2.9 per cent rate in the second half.

The more-than-three-year downturn in the housing market is very close to coming to an end, with substantial growth (from a low base) expected for next year.

According to the survey, the key areas of concern involve the large increases in federal debt and unemployment rates that are expected to remain very high through next year.

The unemployment rate is forecast to rise to 10 percent in the first quarter of next year and edge down to 9.5 percent by the end of 2010. Inflation is expected to remain contained throughout 2010.

However, despite signs of recovery in the financial markets, most respondents said it would take some time to return to normalcy.

About 29 per cent of respondents believed this would happen in the second half of next year.

The good news is that this deep and long recession appears to be over, and with improving credit markets, the US economy can return to solid growth next year without worry about rising inflation.