Economists believe that there is currently a break in the economic downturn and, according to the survey, most revised their forecasts upward. Twenty-seven said that the recession had ended and 11 predicted a trough this month or next. GDP is expected to go up in the third quarter by 2.4 percent, spurred partially by strong demand thanks to the "cash for clunkers" car-rebate program.
News that job losses were much lower than expected for July also added fuel to the discussion that the recession is near an end. However, some still believe that the unemployment rate will top out near 10% before finally falling back down.
Bloomberg News also surveyed economists. In its poll, analysts lifted their estimates for the third quarter by 1.2 percentage points compared with July, which would be the biggest boost in surveys since May 2003. These projections followed better than expected reports in manufacturing, employment and home construction. Consumer spending is expected to rise about 1.5 percent from July to December.
These indicators all point to a single conclusion: President Obama's stimulus program is working. Even though some called Obama's stimulus program insufficient and budget-busting, the numbers are proving them wrong. Now the big test will be whether Bernanke can avoid raging inflation as he works with the Obama administration to wind down the stimulus programs.
After today's Open Market Committee meeting, economists expect the Fed to keep the target rate between zero and 0.25 percent and continue its plans to buy $1.45 trillion of housing debt by year end to stay on the road to recovery. Stay tuned - we'll know more at about 2:15 PM today, when the Fed releases its announcement following the meeting.
Lita Epstein has written more than 25 books including Reading Financial Reports for Dummies and The Complete Idiot's Guide to the Federal Reserve.
