Forecasts Hold Little Fun for Consumers in 2010: Will Washington Help?

(MoneyWatch)  An association of U.S. economists has predicted a tepid business picture for 2010. And this group should know - it's the National Association of Business Economics (NABE), whose views are informed by the ground-level information they see from their customers and suppliers. They have declared the recession over, but they expect everything to be held back by slow growth in wages, and in turn consumer spending. But more support from government may be coming.

The NABE has just held a big convention in St. Louis, where 80% of members surveyed have pronounced that the Great Recession of 2008 - 2009 is over.

Even though they predict real GDP will grow at a three percent rate in the year's second half, 2009 will still end as a terrible year for the U.S. economy, declining 0.5 percent from fourth quarter 2008.

For 2010, the NABE membership is looking for three percent real growth, but coming out of a deep recession, three percent seems pretty sleepy. The forecasts include anemic numbers on housing starts (just 800,000) and car sales (12 million), and overall personal consumption expenditure (PCE) rising just 1.6 percent over a terrible 2009. For reference, the year-over-year increase in PCE averaged seven percent in the first year climbing out of the last three recessions - even the 2002 jobless recovery.

Yesterday's featured speaker at the St. Louis NABE conference was Lawrence Summers, head of President Obama's National Economic Council. He ruled out a second general stimulus, but put forth several more focused proposals (I tried to find a copy of his full remarks, even called The White House but had to settle for sound bites from those at the scene). From Bloomberg:

"There will never be a better time to improve America's infrastructure than the present," Summers [said] "That is why this is an important period for infrastructure investment..."

And:

"Can there be a better time to invest in the nation's community colleges than at a time when many who could benefit from those community colleges are unemployed and at a time when their resources are sorely stretched?" Summers said.

Dr. Summers also hinted at programs to boost consumption, but did not want to steal the President's thunder. From the Financial Times:

It is not for me . . . to preview policies that President Obama will announce in coming weeks..." But he said that while the economy had improved substantially, people had to recognize that demand was hobbled and US consumers and exports should be supported.

"We need to recognize that lack of demand will be a major constraint on output and employment in the American economy for the foreseeable future... "Direct public investment has a crucial role at a time like this."

Maybe we'll be hearing about programs where people are paid to go back to school and learn new skills.

In the meantime, at least one person is enjoying the recession. In a recent Us Weekly, which I saw at the doctor's office, 28 year-old A-list actress Natalie Portman says:

I think it's kind of an exciting time. Everyone is cutting back.

Sheesh.

Postscript: When research on this post began early this morning, I came across a great anecdote on incomes and saving, from an item in the Daily Dash of PLANSPONSOR magazine.

With a St. Louis dateline - same as the NABE gathering - it cited a survey, with a white paper and everything, sponsored jointly by Quicken Financial and the American Mustache Institute and conducted by Menjou"Bärtchen Research Consultants, concluding that individuals with mustaches tend to earn more, but save less. Turns out it's a well-done joke (or a cruel hoax, for bloggers on the economy looking for a different twist on the news - Reuters ran it as a news item without any apparent irony).