Economy: Hurry up and wait

Look for an end to the recession by August, according to the latest WSJ survey of economists, but it could be several more years before we see a full-bore recovery. On average, the 52 economists who participated in the survey expect GDP to contract 1.4 percent in the current quarter, with slow growth expected to return by the July-September period.

A consumer retrenchment is one factor that is likely to make any recovery a long slog. The economists on average expect the unemployment rate to climb to 9.7% by the end of the year, with two million more jobs lost over the next 12 months, even as growth returns to the economy. The depth of the downturn means it will take years to eat up the slack created by the recession. To gain back ground lost and bring down unemployment, the economy has to grow by more than its potential rate. Nearly half of the economists said it will take three to four years to close the output gap, while more than a quarter say it will take five to six years.