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By Diane Stafford

RISMEDIA, January 6, 2009-(MCT)-Harry Truman joked that he needed a one-armed economist so he wasn’t faced with someone who always said “on the other hand …” Well, BNA Inc. found quite a few one-armed economists.

The business research and information company surveyed 25 economists from financial institutions, consulting firms and academia and found near unanimous agreement that the recession will persist for another six months.

All but one of the economists said economic growth will resume gradually in the third quarter-largely depending on the success of the as-yet-unspecified federal economic stimulus package.

“We are going through some of the scariest parts right now,” said John Silvia, chief economist at Wachovia Corp. and one of the participating economists. “By the end of 2009, economic growth should return.”

Meanwhile, the economists agreed the job market would remain sour for several months after the real gross national product begins to tick upward.

“Jobs always lag the economy,” Stuart Hoffman, chief economist at PNC Financial Services Group, told BNA.

Hoffman said he expected job losses to be “widespread,” with the steepest cuts in the automotive sector.

As a group, the economists calculated that U.S. employers will continue to jettison an average of 218,200 jobs a month in the first half of the year and that the national unemployment rate will continue rising into the second half of the year.

An average jobless rate of 8.2% was forecast for the last six months of 2009, with individual forecasts ranging from 7% to 8.9%.

Only one economist, Susan Sterne of Economic Analysis Associates, predicted job growth in 2009.

On the brighter side, the outlook calls for inflation to be relatively low-averaging 1.3%-over the year (although two of the economists predicted a slight deflation of -0.2% or -0.4% for the year).

In terms of monetary policy, the consensus prediction was for the Federal Reserve to “keep the fed funds rate at very low levels early in the year and generally maintain that before beginning to tighten slightly late in the year.”

Most of the respondents said they expected the central bank to continue pursuing monetary stimulus initiatives.

“Wherever there is a market failure, the Fed will make a market,” predicted Joel Naroff, chief economist at Naroff Economic Advisors Inc.

The average forecast change, fourth quarter 2008 to fourth quarter 2009, was for:

– Real gross domestic product: 0.1%.
– Real personal consumption expenditures: 0.8%.
– Real business fixed investment: -6.8%.
– Hourly compensation: 2.6%.
– Unit labor costs: 1.2%.
– Consumer price index, overall (Dec. 2008-Dec. 2009): 1.3%.
– Federal funds rate (end of 2009), 0.7%.

The economists also focused on the worldwide nature of the economic downturn which, they said, requires fiscal stimuli in both industrial and developing countries to avert a more severe financial crisis.

© 2009, The Kansas City Star.
Distributed by McClatchy-Tribune Information Services.