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A Sluggish Recession

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By Jim Cooper

A Sluggish Recession

We asked 45 corporate economists for their collective wisdom on everything from the credit crunch and the housing slump to Federal Reserve policy and global growth. Here's a snapshot what they said:

BusinessWeek's annual economic outlook survey (link to big table) expects the economy to be mired in recession until the second half of 2009, when massive current and expected policy stimulus begins to gain traction. Still, they look for the unemployment rate to continue rising throughout the year. The economists expect profits to get hammered by weak demand both at home and abroad, perhaps more so than investors currently expect. Sagging demand, plus the plunge in oil prices, will push overall inflation down sharply, actually edging below zero, but fears of deflation will be allayed by a much less pronounced decline in core inflation, which excludes energy and food.

Interest rates will remain historically low, as the Federal Reserve continues to pump new funds into the markets. Housing starts will continue to slide gradually lower, before hitting bottom around midyear, although home prices will keep falling through the year, albeit not a much as in 2008.

Check out the economists views on growth, profits, Fed policy, inflation, unemployment, homebuilding, and home prices: