The Wall Street Journal survey of 52 economists and forecasters predict:
Net Jobs growth will be 180,000 a month for the next 12 months.
At this pace, it will be July 2014 before jobs return to pre-recession levels.
The economy is expected to grow 2.4% this year which is slightly better than the past two years but below the rate for past recoveries.
The three main pillars of our economy, housing, banks and businesses, are the most solid they have been in years.
Economic Road Clearing, but the Going Is Slow
After four years of crises, foreign and domestic, that threatened to plunge the U.S. economy back into recession, the road ahead at last looks comparatively free of roadblocks. But progress remains slow, and there is little reason to expect meaningful acceleration in coming months
First, the good news: The housing market, whose crash sparked the financial crisis more than five years ago, is at last showing signs of a sustained rebound. Europe remains mired in a recession, but the threat of an out-and-out collapse appears to have faded, at least for now. Federal budget cuts and political squabbling have slowed growth and increased uncertainty, but Washington's enthusiasm for turmoil-inducing brinkmanship has shown signs of fading.
Freed from the cycle of crises, the economy appears to have found some stability. Overall growth has rebounded from a soft patch at the end of last year, consumers have continued to spend in the face of tax increases, and employers added 165,000 jobs in April, easing fears that the U.S. was entering yet another "spring swoon." Layoffs have fallen to a five-year low.
Experts expect the steady path to continue. In the latest Wall Street Journal survey of economists, forecasters said they expect employers to add just under 180,000 jobs a month over the next 12 months, about the same pace as the past two years. They think overall economic growth has slowed somewhat from the first three months of the year but will quickly rebound; for the full year, economists expect 2.4% growth, better than the past two years.
The 52 forecasters, not all of whom answered every question, are unusually unified in their assessment, with few seeing growth significantly faster or slower than the consensus estimate. Asked about economic threats, they cited a familiar litany of concerns—a renewed crisis in Europe, a sharper-than-expected slowdown in China, gridlock in Washington—but even most pessimists saw little threat of a severe downturn. Overall, the economists put the risk of a new recession at just 15%, down from 24% in December.
"The economy is in vastly better shape than it was a year ago, two years ago, three years ago," said Allen Sinai of Decision Economics. He said the major pillars of the economy—households, banks and businesses—are the most solid they have been in years.
While the fundamentals are getting stronger, the pace of growth remains too weak to quickly heal the wounds of a historic recession. The U.S. still employs more than 2.5 million fewer people than when the recession began. At 180,000 jobs a month, it will take until the middle of 2014 to close that gap. Adjust for population growth, and it will take nine more years to return to the prerecession level of employment at the current rate of growth, according to the Brookings Institution.
Past U.S. recoveries have featured periods of rapid acceleration that made up lost ground and set the economy back on its prior growth trajectory. That hasn't happened this time around. Several times over the past four years, the economy has seemed poised for a period of breakout growth, only to lose momentum after a few months.
There is little sign the economy will end that pattern now. Just four economists in the Journal survey foresee growth above 3% for the year; none forecast employment growth of more than 250,000 jobs a month. The strengthening housing market, along with continued stimulus from the Federal Reserve, should provide an economic boost, but other factors—most notably the continuing effect of the federal budget cuts known as the sequester—will likely keep growth in check.
Michelle Meyer, an economist at Bank of America BAC -0.31% Merrill Lynch in New York, said optimists have "miscalculated" the benefits of the housing rebound and other positive developments, which she said "aren't potent enough to negate the imminent fiscal shock in an environment of restrained credit creation."
"Headwinds and tailwinds are canceling each other out," said Lou Crandall of the economic research firm Wrightson ICAP.
The longer that stalemate continues, the worse the long-term damage will be. Already, millions of unemployed Americans have given up looking for jobs; many will likely never work again.
Youth unemployment stands at 16.1% and would be a Europe-like 22% if more than 1.5 million young people hadn't dropped out of the labor force; economic research suggests their early-career woes will leave lasting scars. The slow pace of growth leaves the economy more vulnerable to an unexpected shock—meaning a flare-up in Europe's debt crisis or surge in oil prices could send the U.S. back into crisis mode.
For now, though, that risk has receded. Nearly four years after the recession ended, the economic conversation has at last moved beyond talk of a "double dip." But it still doesn't feel like much of a recovery.
Write to Ben Casselman at ben.casselman@wsj.com and Phil Izzo atphilip.izzo@wsj.com
