US Economy Could Recover Much Sooner Than Expected
No one is expecting such robust job growth this time, but economists say the relatively strong showing in productivity during this recession points to lean payrolls, which will have to be fattened up--in some cases, quickly--as the economy improves.
"When you have high peaks in jobless claims, you have sharp declines in claims," says Brusca.
More broadly, economists also point to a number of economic factors that bode well, despite lingering concerns about he credit crunch.
“Cyclical forces trump secular forces,” says Brusca, referring to the massive de-leveraging by both consumers and business. “This is especially true when authorities have stepped in to stabilize it,” after a shocking event like Lehman.
“We have massive monetary and fiscal stimulus in the pipeline,” says Macroeconomic Advisers President Chris Vavares.
Macroeconomic Advisers, whose economist forecast for 2010 is more optimistic than that of the White House, estimates the government fiscal stimulus package will add 2 percent to GDP in the second quarter, one reason why the firm expects the economy to shrink by only 0.5 percent during the period. The consensus is for a 2.0-percent decline.
Then there are a handful of cyclical elements on the verge of being positives.
Consumer spending is growing again, while inventories are being wound down. Housing and autos, in particular, says economists, hint at both pent-up demand and a production rebound.
“Housing will be an important element of the upturn right from the start,” says Mussa, who notes housing starts have been “beaten down” so much that supply will have to be added simply to accommodate demographic demand from new households.
The auto sector, which posted a surprise increase in sales in March, also has the potential to be a driving force.
“We all focus on what lousy shape they are in and not on that they have been cutting production,” says Varvares. “When you look at how quickly motor vehicles sales fell off the table last year--that big decline had a lot to due with the lack of financing.”
Varvares says automakers are starting to feel better about the credit environment and will offer better financing deals.
Macroeconomic Advisers' analysis makes a strong case for the role of housing and autos.
The two sectors erased a combined 2.5-3.0 percent from first quarter GDP, says Varvares. Autos, however will add 0.7 percent to GDP in the second quarter. Housing is expected to add 0.5 to 1.0 percent to GDP in 2010.
So, if the optimists are right, it's a case of gloom and boom.
"People were very gloomy in late '74 and '75," says Mussa. "They were gloomy in 1982."