Economic Recovery

In the midst of the deepest recession in the experience of most Americans, many professional forecasters are optimistically heading into the new year declaring that the worst may soon be over.

For this rosy picture to play out, they are counting on the Obama administration and Congress to come through with a substantial stimulus package, at least $675 billion over two years.

They say that will get the economy moving again in the face of persistently weak spending by consumers and businesses, not to mention banks that are reluctant to extend credit.

If the dominoes fall the right way, the economy should bottom out and start growing again in small steps by July, according to the December survey of 50 professional forecasters by Blue Chip Economic Indicators. Investors seemed to be in a similarly optimistic mood on Friday, bidding up stocks by about 3 percent.

But in the absence of that government stimulus, the grim economic headlines of 2008 will probably continue for some time, these forecasters acknowledge.

“Without this federal largess, the consensus forecast for 2009 is for the recession to continue through most of the year,” said Randell E. Moore, executive editor of Blue Chip Economic Indicators, which conducts the monthly survey of forecasters.

Many economists are more pessimistic, of course. Nouriel Roubini at New York University, who called the 2008 market disaster correctly, wrote in a recent commentary on Bloomberg News that he foresees “a deep and protracted contraction lasting at least through the end of 2009.”

Even in 2010, he added, the recovery may be so weak “that it will feel terrible even if the recession is technically over.”

But Mr. Roubini is not among the economists surveyed by Blue Chip Economic Indicators. These professional forecasters are typically employed by investment banks, trade associations and big corporations.

They base their forecasts on computer models that tend to see the American economy as basically sound, even in the worst of times. That makes these forecasters generally a more optimistic lot than the likes of Mr. Roubini.

Their credibility suffered for it last year. They did not see a recession until late summer. One reason they were blindsided: their computer models do not easily account for emotional factors like the shock from the credit crisis and falling housing prices that have so hindered borrowing and spending.

Those models also take as a given that the natural state of a market economy like America’s is a high level of economic activity, and that it will rebound almost reflexively to that high level from a recession.

But that assumes that banks and other lenders are not holding back on loans, as they are today, depriving the nation of the credit necessary for a vigorous economy.

“Most of our models are structured in a way that the economy is self-righting,” said Nigel Gault, chief domestic economist for IHS Global Insight, a consulting and forecasting firm in Lexington, Mass.

Even if the economy begins to right itself by this summer, the recession would still be the longest since the 1930s, which was the last time the government engaged in widespread public spending to overcome the persistent inertia in consumer and business spending.

“The consensus says we are in the deepest part of the recession now,” Mr. Moore said. “But the stimulus package and much lower gasoline prices are expected to somewhat restore consumer confidence and personal spending and that will put us on the road back.”

There is a psychological factor that Robert Shiller, a Yale economist, hopes will come into play.

“If we have massive infrastructure spending and people feel that it is working, it could create a sense that we are O.K. and people will go back to normal,” he said. “The real problem is that we are on hold. Everyone is.”

The expectation of most forecasters, several report, is that most of the Obama administration’s stimulus will go for public works projects and tax cuts.

With this sort of stimulus, the gross domestic product, the chief measure of the nation’s output, should begin to rise — if not in the third quarter, then certainly in the fourth, the forecasters say, and the unemployment rate will finally peak at 8 to 9 percent by early next year.

“The job insecurity is very serious; that is the worst aspect of all this,” said Albert Wojnilower, a consulting forecaster at Craig Drill Capital. “But most upturns in the economy have begun with upturns in consumption, when people who still have jobs stop worrying about losing them.”