The Wall Street Journal reported a survey of 55 economists conducted on December 3 - 8, 2010 which found the majority of those economists raising their growth projections for the US economy. Their projections were raised not only for the last quarter of 2010, but also for the year 2011. How cool is that?
Now, before we get too excited, let’s remember it’s going to take a really strong economy to bring the unemployment rate down. There are approximately 100,000 + new workers joining the economy every month, so we need substantial growth to create those jobs plus jobs for the several million who lost theirs during the latest downturn.
Just in case you need some perspective, usually growth below 1.0, while certainly much better than a contraction, is considered rather anemic. For the current quarter, the economists increased their growth expectations from 2.4 to 2.6%; for 2011, they increased their expectations to 3.0%. If we hit 3.0% growth in all four quarters of next year, that could bring unemployment down to under 8%, a number we haven’t seen in over a year.
So, we are recovering, albeit at a slow pace. Are you ready for some more good news? Well, there is less and less of a chance the economy is going into another recession, which is what is famously called the “double dip.” Of the economists surveyed, there is only a 15% chance that will happen, compared to having the odds at 22% for a double-dip recession as recently as September. Even more exciting is that the majority of the economists believe the 2011 economy will outperform their forecasts than underperform. Folks, we are headed in the right direction!
Since the outlook for the economy looks promising, what are some of the financial promises you are making for yourself? Will you start budgeting your income so you won’t get into a mess the next time the economy turns down? This is the perfect time to start so you’ll be ready when the economy picks up even more steam.