Modest Recovery Seen in 2010, as Boost from Temporary Measures Fades

BNA's Annual Economic Outlook

ARLINGTON, Va., Jan. 5 /PRNewswire-USNewswire/ -- The recovery will continue in 2010, as the economy gradually improves. The Federal Reserve is expected to keep interest rates at a historic low for the first half of the year. Continuation of the expansion will hinge on increased job growth and business investment, as government stimulus fades.

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U.S. Economy

• The recovery will continue in 2010 at a moderate pace, following the end of the recession in the second half of 2009.
• Key underpinnings of growth will be continued government stimulus for most of the year, business and consumer spending, and increased hiring.
• Major risks to the economy include high unemployment, business uncertainty, and a pullback in lending.

Labor Markets

• Employment gains will average 70,700 jobs per month in the first six months of 2010, accelerating to 135,300 jobs per month in the second half.
• Unemployment rate will hover around 10 percent throughout the year, averaging 10.2 percent in the first half and 9.9 percent in the second half.
• Private sector workers' total hourly compensation will grow 2.2 percent in 2010, up from a 1.2 percent hike in 2009, as of the third quarter.

Monetary Policy

• Fed will maintain key interest rate target at historic low range through the first half of 2010.
• Inflation is expected to remain tame, especially core inflation.
• Central bank's emergency lending programs will end, as asset purchases wind down.

World Economy

• Global output is expected to grow just over 3 percent in 2010, following the worst worldwide downturn in decades.
• Central banks will hold off raising interest rates until at least the second half of the year.
• Europe and Japan will lag the U.S. recovery, while Asia will remain the strongest region.

Larry Swisher covers the U.S. economy, macroeconomics and economic policy, labor markets, and airline labor issues for BNA. His reports appear in the Daily Report for Executives, Daily Labor Report, and other BNA news services. https://profnet.prnewswire.com/Subscriber/ExpertProfile.aspx?ei=92770

Aaron Lorenzo covers financial institutions and some of the policies that affect them for BNA's news publications, including new regulation in the offing for the financial sector, programs implemented under the $700 billion economic rescue bill, fiscal stimulus packages rolled out by the Treasury Department and Congress, and Federal Reserve policies. https://profnet.prnewswire.com/Subscriber/ExpertProfile.aspx?ei=92762

Diana I. Gregg focuses on economic policy and international finance and development for BNA's Daily Report for Executives, including tracking the activities of the IMF, the World Bank, and the Inter-American Development Bank. She is a senior member of BNA's economic reporting team. https://profnet.prnewswire.com/Subscriber/ExpertProfile.aspx?ei=92772

Michael Rose focuses primarily on labor economics. He also covers collective bargaining agreements, legislation, and public policy. https://profnet.prnewswire.com/Subscriber/ExpertProfile.aspx?ei=92771

Available Topic Expert(s): For information on the listed expert(s), click appropriate link.

Larry Swisher

https://profnet.prnewswire.com/Subscriber/ExpertProfile.aspx?ei=92770

Aaron Lorenzo

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Michael Rose

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SOURCE BNA