Economists think the US unemployment rate will stay above 9% through 2010, the Wall Street Journal survey finds. Accordingly, those in the know believe the Federal Reserve will hold interest rates down at least through spring. “For real people, there is no recovery until the unemployment rate stabilizes,” one economist said. “If the Fed starts raising rates in the face of continued job losses, it could abort a recovery.”
On a more positive note, most economists surveyed foresee the recession ending in August, and economic growth returning to the US in this year’s third quarter this year. Many praised Treasury Secretary Timothy Geithner, but most see the Fed as primarily responsible for the impending recovery. And “inflation is more of a 5-year than 2-year threat,” one economist said.