The US is likely to remain in an "intense recession" through the spring, the Conference Board said Monday, despite a surprising climb in the group's main forecasting gauge last month.
The index of leading economic indicators rose 0.3% in December, mainly due to the "continued and very large" increase in the money supply because of the flood of federal bailouts, the private research group said.
The rise in the index, which is designed to forecast economic activity six to nine months ahead, came after a 0.4% decline in November. Economists had expected a 0.3% decline for last month.
But with nearly every component but the money supply in decline, the Conference Board said unemployment could rise to 9 percent from 7.2 percent as the country remains in an intense recession through spring.
"As we move into the new year, the big question is whether conditions will worsen further," said the research group's economist Ken Goldstein in a statement on Monday. "The Conference Board's indicators suggest we'll still be in an intense recession through the Spring."
"Expect declines in output and employment over the next several quarters, with unemployment possibly rising to 9%," Goldstein added.
—AP and Reuters contributed to this report.