The US economy is passing through the worst part of the recession, but growth may return by the second half of next year, according to economists in the latest
Wall Street Journal survey.
"The intensity of decline will wane," Stephen Stanley of RBS Greenwich Capital was quoted as saying. "We've cut out a lot of the low-hanging fruit, and it gets progressively tougher to see such rapid rates of decline."
Economists, the paper said, were supportive of more government stimulus. More than 80 per cent favour a stimulus package in January, even if one is passed before the end of 2008. Some 34 per cent of respondents said top priority in such a package should be permanent tax cuts.
On an average, economists said, the total size of government stimulus this year and early next should be more than $250 billion.
Economists, the
Journal said, saw other factors boosting the chances of recovery.
"Stimulus will help, but it won't get us out of the problem. It's tantamount to taking aspirin, as t will only temporarily ease pain," California State University's Sung Won Sohn told the paper, saying rebuilding confidence as essential for recovery.
President-elect Barack Obama "needs to extend unemployment, work to stem foreclosures and use other plans to demonstrate that he's doing something. To stabilise confidence, you need programs to ease pain. People