Big Biz sees slow job growth, no recession

WASHINGTON (CNNMoney) -- A panel of economists at the U.S. Chamber of Commerce says the nation will continue to chug along with sluggish job growth, with a recession unlikely, according to a forecast released Wednesday.

"None of us is forecasting a recession," said Marty Regalia, the business group's chief economist.

Regalia said that this recovery is different because it's been much slower than the usual post-recession pick-up. He said the recovery will continue at a similar pace due to turmoil in the housing market.

When the housing market stabilizes, and more Americans feel more wealthy, consumers will start spending again, which will help the economy pick up steam, Regalia added.

"The economy has grown much more slowly and, as a result, the jobs are coming back more slowly," he said. "We're way below potential and we're not creating enough jobs to even employ the new entrants."

Regalia is warning businesses that the economy needs to grow at a rate of 4.5% over the next three years to drive the unemployment rate down to 6%. The latest report on gross domestic product suggests economic growth slowed to 1% on an annual basis in the second quarter.

Obama battles job crisis

Kate Warne, chief market strategist at Edward Jones, a St. Louis-based financial firm, predicted no double-dip recession, because corporate profits have reached new highs and the nation added jobs over the past year instead of losing them. She also noted that the economy continues to grow, even if that growth is slow.

She said the biggest difference between now and 2008 is that consumers, banks and companies are cautious and keeping more in cash. But they aren't as over-leveraged as they were in 2008.

Warne predicts the Fed's response to help the economy will be a shake-up in the composition of assets on its balance sheets to lower long-interest rates. She said she doesn't anticipate a move to help the housing market, since consumers haven't been rushing to refinance their mortgages in the wake of record low short-term interest rates.

Regalia also said the Obama stimulus plan of 2009 worked -- although it didn't add enough jobs to make a bigger dent in the jobless rate because it didn't get the economy growing fast enough.

"It wasn't the best plan, but to say it didn't work at all, I think, is a gross overstatement," Regalia said. "You can see jobs growing (in 2010), but then that policy petered out and there was nothing behind it."