Economists Say Recession Is Not Likely

August 25, 2011

Many home buyers have been sitting on the sidelines due to economic fears and concerns that the U.S. could be heading for a double-dip recession. But a new poll from the Associated Press shows that most economists say a recession is not likely within the next 12 months, yet the economy will continue to be weak into 2012. 

The 43 private, corporate, and academic economists surveyed this month by the Associated Press reported the likelihood of a recession within the next 12 months is 26 percent. They cited high unemployment and weak consumer spending as two leading culprits that will hold back the economy into 2012.

In June, American households trimmed their spending for the first time in nearly two years, and with consumer spending fueling about 70 percent of the economy, it poses a “major risk” to the economy, the economists reported.

The economists surveyed said they are optimistic that economic growth, job creation, consumer spending, and home prices will all rise over the next year — but the gains are expected to be so slight that many won’t notice, the Associated Press reported. 

"We need to see the housing market stabilize," says Sean Snaith, director of the University of Central Florida's Institute for Economic Competitiveness. "We need to see some job creation. Until then, consumers are trying to put nest eggs that turned into Humpty Dumpty back together again ... It's just going to take time."

Meanwhile, the markets will be anxiously awaiting Federal Reserve Chairman Ben Bernanke’s speech on Friday at a conference for the Federal Reserve Bank of Kansas City to see if he unveils any new steps to help revive the economy. 

Source: “AP Survey: Economists Doubt Another Recession Within 12 Months But See Weakness Into 2012,” Associated Press Newswires (Aug. 23, 2011)