Economy improving, but still hurting

chart_econ_survey2.top.gif By Chris Isidore, senior writer


NEW YORK (CNNMoney.com) -- Even if the economy avoids falling into a double-dip recession, the next year will probably feel like one anyway, a CNNMoney.com survey of economists showed.

Unemployment is expected to remain high, according to the survey of 31 top economists. Their average forecast is for the rate to be at 9.5% -- only slightly lower than current levels.

Do you think the economy will enter a double-dip recession?
  • Yes
  • No
  • I donít care what economists say. The recession isnít over

And next year isn't looking much better. Unemployment is only expected to fall to about 9% by the end of 2011, the survey showed.

Overall economic growth is expected to be anemic at best. Economists' consensus forecast is for gross domestic product, the broadest measure of the economy, to grow only 1.9% in the third quarter and 2.5% during the last three months of 2010. Growth is expected to pick up to 2.7% in 2011.

But those forecasts are slower than the pace of growth from earlier this year, and below the historical average growth of 3.6% that typically takes place during a recovery.

And while a majority of the economists are predicting that home prices have bottomed, they are only expected to rise around 1% in the next 12 months. About one in five economists predict more price declines, and the same number project no growth at all.

Even the economists from the National Association of Realtors and the National Association of Home Builders only forecast a 1% increase in home prices over the next year.

Just two economists -- Dana Johnson of Comerica and Brian Wesbury of First Trust Advisors, forecast price increases greater than the 3.6% annual rise recorded by the Case Shiller index in its most recent reading.

The only bright spot for consumers is that overall retail prices are not likely to rise very much in the next year. Economists foresee inflation of only 1% this year and another 1.8% in 2011.

But while that might be good news for shoppers in the short term, economists are still worried about the long-term risk of deflation, or a downward spiral in prices, taking hold.

Deflation can cause companies, unable to sell their products at cost, to cut back on production and lay off workers. It can lead to prolonged economic pain, as in the case of Japan's "lost decade" of the 1990's.

Asked which posed the greater risk to the economy over the next five years, almost twice as many economists surveyed were concerned about persistent deflation than a return of inflation.

One thing that economists expect to become more expensive in the next year is debt. The yield on the benchmark 10-year Treasury note, currently at about 2.75%, is forecast to rise to 3.5%, with nearly a third of economists expecting it to jump above 4%.

That would raise the cost of borrowing not just for the U.S. Treasury but for a wide range of businesses and consumers, whose loan rates are driven by Treasury yields.

"Sooner or later [rates] will go up fast," said Bill Cheney, chief economist for Manulife Financial. "I don't claim to know exactly when or how much, but when it comes it will be a shock -- say [1 percentage point] in three months." To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,408.54 -16.31 -0.10%
Nasdaq 4,095.52 9.29 0.23%
S&P 500 1,864.85 2.54 0.14%
Treasuries 2.72 0.08 3.19%
Data as of 7:27pm ET
Company Price Change % Change
Bank of America Corp... 16.15 0.00 0.00%
Facebook Inc 58.94 0.00 0.00%
General Electric Co 26.56 0.00 0.00%
Cisco Systems Inc 23.21 0.00 0.00%
Micron Technology In... 23.91 0.00 0.00%
Data as of Apr 17
Sponsors

Sections

Spencer has been a supporting member of the "Good Morning America" cast for the past three years. More

Obamacare sign ups hit 8 million, though final enrollment remains to be seen. More

Office for iPad move is a symbolic victory for Nadella's Microsoft, but the company is still weighed down by many of the same old issues. More

Schwinn, Trek and Cannondale are all iconic American bicycle brands. But none of them are made in the United States. More

As Detroit moves closer to reaching a bankruptcy deal, retired civilian workers are poised to be left worse off than firemen and police officers. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.