Those expecting the economy to turn around any time soon may want to reconsider their optimistic outlook. The views on 2009 of a number of economists have become increasingly dismal:
The U.S. recession will be the worst in more than three decades as job losses mount and consumers and companies retrench, a survey of business economists showed.
The world's largest economy will shrink by 1.9 percent this year and a total of 2.8 percent in the current downturn, the most since the 1973-75 slump, according to the median estimate in a poll taken by the National Association for Business Economics. Another 3.2 million Americans will be cut from payrolls in 2009, pushing unemployment to 9 percent by year-end, NABE said.
Among the other gloomy statistical predictions:
* Eight out of 10 economists projected the stimulus plan signed into law last week by President Barack Obama would contribute at most a 1 percentage-point boost to gross domestic product this year.
* The federal budget deficit will swell to a record $1.5 trillion in the fiscal year ending in September, from $455 billion in the previous 12 months, the survey showed. The gap will probably be $1.1 trillion next year, NABE economists said.
* Consumer spending, which accounts for more than 70 percent of the economy, is projected to decline 1.3 percent this year, compared with a 0.2 percent drop forecast in the November survey.
* Economists cut 2009 projections for auto sales to 10.9 million from the 12.5 million projected in November.
* Builders will break ground on 630,000 homes this year, the fewest in 50 years of record-keeping and less than the 870,000 starts projected in the November poll. Still, participants predicted home sales would reach a trough by the middle of the year.
There are a few glimmers of good news:
The cost of living will decline 0.8 percent in 2009 as the benefit of lower raw-material expenses is passed through to consumers, the NABE report indicated.
At least good news if you're not worried about deflation. Which I'm not, considering that the way we're spending and printing money right now will likely lead us to an opposite problem soon enough.
The other good news from the poll is that most economists expect the US to lead the global turn around:
Even as the outlook worsened for 2009, economists in the poll projected the U.S. would be the first to emerge from the global recession, followed by China and Canada.
Obviously there will be a recovery at some point. It just doesn't appear likely to be any time soon.
Another indication of the depth and breadth of the downturn is how companies that weren't part of the original financial crisis are now being pounded on Wall Street:
While eyes have been locked on the steep descent of Citigroup and Bank of America, financial stocks are no longer the main culprits in pulling the stock market toward 11-year lows.
Instead, manufacturers and even makers of basic consumer goods are now the biggest drags, a shift that has some investors worried.
Although the current bear market began as a housing and banking crisis, the damage has spread. Financial stocks have shrunk so much in value that their continuing declines, while still large in percentage terms, are too small in dollar terms to move the indexes as much.
A more diverse group is leading the declines today. A look at the Dow Jones Industrial Average this year shows declines in stocks like 3M and Procter & Gamble have had more of an impact than the drop in Citigroup or American Express.
"What started as a subprime mortgage crisis became a U.S. credit crisis, then a U.S. recession, and now we are in a full-fledged, globally synchronous recession of historic proportions," says Leo Grohowski, chief investment officer BNY Mellon Wealth Management in New York. "There are very few areas that have been insulated from the decline in earnings and in stock-price performance."
It's only February and 2009 already seems like a long year. Unfortunately, it's only going to get longer and harder from here.