As the U.S. recession, according to a consensus among experts, approaches its 10th month, economists are stepping up to the plate with forecasts about a recovery.
Representatives from major U.S. investment houses discussed the prospects at the Council on Foreign Relations, a private policy group. The conventional wisdom is that recessions since World War II tend to last about 11 months. That would mean that around January 31, the proverbial bell could ring to signal the beginning of a recovery for the United States.
Were it only that simple, the experts say.
Economists seem to be searching for models to base their expectations on. Many now believe the traditional road from downturn to recovery has changed, and the usual means for reversing course are proving ineffective.
Most experts seem to agree that monetary policy, for one, is not working. The U.S. central bank is embarked on a credit-easing policy, pouring more liquidity into the system.
William Dudley, chief economist for the investment house, Goldman Sachs, has said the "Fed's" actions have accomplished very little for the economy.
"The economy does not function on the federal funds rate. Monetary policy works through the stock market, the dollar, long term interest rates, and the Fed [Federal Reserve] really has not gotten much effect this year. And so that is why monetary policy is not going to be very stimulative on the up side," he said.
Many economy-watchers blame the enthusiasm over technology for the excesses of the past several years. The "old economy" gave way to the "new economy," mostly, it would appear, in the minds of investors on the world's stock exchanges. Share prices soared to what many admit were unsustainable heights. When the so-called "bubble" burst, prices plunged, capital dried up and corporate investment stalled.
The number of optimists among the professional forecasters has dwindled. Even one of the more "bullish" of the lot, Bruce Steinberg, chief economist for investment firm Merrill Lynch, has tempered his outlook somewhat, offering a more modest rate of growth for the U.S. economy during the initial recovery phase.
But economist Steinberg's prediction is well above the average guess. He expects a growth of more than five percent, compared with the two to three-percent other experts forecast.
The U.S. economy, he said, will recover and will grow again, faster than it would appear right now.
"We do not know how long the next expansion will persist. It is too early to talk about that. But we are going to grow. We are not just going to sit there, like Japan, or Germany even. The United States is not like those economies. It will grow, and will grow fairly robustly," Mr. Steinberg said.
But the "bottom line," analysts say, is that economic forecasting is not an exact science, especially in these times. Globalization, apparently, is complicating the picture.
Trade today accounts for nearly 25 percent of the global Gross Domestic Product. And, with Japan's economy virtually ground to a halt, and the European economies sputtering, some experts are hedging their bets on how fast the United States can return to robust economic growth.