During an event held this morning in Orange County, Calif., Chapman University president James Doti and Esmael Adibi, director of the A. Gary Anderson Center for Economic Research, presented an update of the 2009 Forecast to an audience of approximately 800 business and community leaders. They reaffirmed the predictions first given in December 2008, and pointed to signs that the economy is on its way up.
On the plus side, the banking sector is "almost out of the woods," stocks have rebounded, consumer confidence is finally rising and housing remains affordable. And most likely, the recovery won't be W-shaped, which would be the case if the stimulus was the only thing supporting a turnaround.
But, Doti cautioned, even if a recovery is imminent, it will be a "mild" one, due to flagging levels of consumer spending (caused in part by higher savings rates) and sorry unemployment numbers that won't reverse until 2010.
Adibi focused on the impact of housing prices and jobs. Although he noted that consumers are "very gloomy," he said the brunt of the recessionary forces will hit in the second quarter of 2009, and year-over-year change in GDP would go from -4.1 percent at the end of 2008 to +2.8 percent by the end of 2009.
He boldly added details to the predictions, stating his belief that the recovery would begin in September 2009. "It's actually going to start on September 8, 2009," he joked. "My birthday."
*According to BusinessWeek, the 2008 Chapman forecast was one of just two the publication tracked that predicted the current recession. The updated forecast is available in the university's June 2009 Economic & Business Review.