Economists Say Recession to End in Q309
The end of the economic recession later this year won't necessarily mean relief for thousands of unemployed homeowners struggling to make payments, according to the American Bankers Association's (ABA) Economic Advisory Committee. Bank economists generally see the recession ending in the third quarter, signaling economic growth despite lingering highs in unemployment. “The economy will return to growth but not to health,” says Bruce Kasman, committee chairman and chief economist for JP Morgan Chase, New York. “Growth in the coming quarters is likely to gather momentum but will not prove sufficiently robust to undo much of the severe damage done to our labor markets and public finances." The committee sees an end to the three-year housing market downturn, with housing starts rising later in 2009 and home prices moving modestly higher in 2010. "Lower prices and low mortgage rates have greatly improved the affordability of homes,” Kasman adds. “A recovery in the housing sector will be an important contributor to economic growth.” But credit conditions are likely to remain tight and employers will continue to shed jobs, pushing unemployment up to a 10% peak before leveling out at or above 9.5% through next year. Write to Diana Golobay.