Recession will fade by year’s end, experts say

Wednesday,  March 25, 2009 3:04 AM

By David Pitt

ASSOCIATED PRESS

A group of financial wizards looked into their crystal ball yesterday and saw some good news.

The recession will ease by the end of this year and companies will begin adding workers, signaling the end of the worst economic downturn since the Great Depression.

It was the 64th day of the Obama administration, and Chicago-based Dow Jones Indexes assembled a group of financial experts to assess the effect of government actions — whether they will work to stem the recession and what opportunities that might present investors.

The recession has affected every region of the country and sector of the economy, said Gus Faucher, director of macroeconomics at Moody’s Economy.com, which conducts independent research and provides economic forecasts.

The good news is that there’s an end in sight. The economy will pull out of the recession at the end of this year, marking a duration of 24 months, about twice as long as the average post-World War II recession, Faucher said.

The unemployment rate is expected to peak at nearly 10 percent in the first half of 2010. Without the $787 billion government stimulus package, he estimated job losses would have continued into the second half of the year and peaked at about 12 percent.

"That would take what is now a severe recession and actually turn it into a deep depression," he said. "We think the fiscal stimulus package is vital in turning around attitudes toward the economy."

Home sales will turn around by midyear, and home prices will begin recovering by the end of this year after bottoming out at 35 percent of their value from peak to trough. Home prices won’t return to their values of a few years ago during the boom but will recover from current lows, he said.

Banks likely will begin seeing improvement in capital as the government program to remove bad assets kicks in. Faucher predicted that major bank and financial services company failures will abate in the second half of this year and credit will begin to move again.

The stimulus package will spend $50 billion on roads, bridges, utilities and other infrastructure, said Craig Noble, portfolio manager, for Brookfield Redding, a Chicago-based investment manager of global real-estate and infrastructure securities.

He sees a potential sweet spot for investors in companies that own the assets that will benefit from the needed spending.

Qualified first time buyers who close prior to July 1, 2008 can claim their deduction on their 2008 Income Tax Return!

Click HERE to get the IRS form. Read the instructions, consult your tax preparer, and see if you qualify!  Free money for buying your first home!

Need some help finding the perfect home? I’m happy to assist in any way that I can, call 614.442.6595 to set up an initial consultation.