The latest forecasting survey by the Wall Street Journal has some good news and bad news.
The economy will grow at a slightly faster rate in 2011, about 3% for the year according to the economists who were surveyed.
That's the good news. The bad news is that is far below the average growth coming out of a recession and probably won't generate the kinds of jobs numbers that will make a dent in the unemployment rate:
The economists now see stronger expansion in the first half of 2011, with growth picking up speed as the year progresses. For the year, they expect GDP will rise 3%. Meanwhile, they have reduced the odds of a double-dip recession to 15%, the lowest average forecast of the year, from 22% in September survey.
The majority of the respondents also say that there is a better chance the economy in 2011 will outperform their forecasts than that it will underperform. Thirty-five economists said the risks to their forecasts are more to the upside; 14 said the risk was to the downside.
Data on trade, retail sales, consumer sentiment and manufacturing have been looking better. Economists also were generally encouraged by news from Washington on a tax-cut compromise that included an unexpected temporary reduction in payroll taxes in addition an extension of the Bush-era tax cuts. The survey was conducted from Dec. 3-8, so not all of the forecasts take the tentative tax deal into account. Strong data on exports Friday also caused some economists to push up forecasts. Macroeconomic Advisers, for example, raised their fourth-quarter GDP tracking forecast by 0.3 percentage point to 2.3%.
Some economists are even more pessimistic:
To be sure, despite the rosier outlook there are still problems that could hold growth back. A disappointing November employment report showed a small 39,000 increase in jobs, while the unemployment rate ticked up for the first time in three months to 9.8%. Though more than 4-in-5 economists don't see the unemployment rate increasing from here, the pace of job growth still is expected only to bring the jobless rate down slowly. On average, the economists still expect the unemployment rate to sit at 9% at the end of next year, with the economy adding around 160,000 jobs a month.
In short, an anemic recovery continues with jobs growing at a snail's pace.