Recession is Going to have Long Term Effect on US Economy

The worst recession since the great depression made a big dent on US economy and it will weigh on US labor market for many years to come.  The result of the latest Wall Street Journal  survey with 48 economists speculates that US economy will witness 3.1 % growth in Gross Domestic Product starting from the third quarter of this year. The labor market is going to take longer time to heal due to this heavy recession. The economists also predicts that chances are less that unemployment will be below 6%. Currently, it stands at 9.8 % in September.

The recent good news is that the unemployment claim fell 33,000 to 521,000 in the week ended Oct 3. It may also mean that a good number of people exhausted their claims after collecting several months. While nine of the 46 economists who answered a question on the subject supported tax cuts for employers and seven are in favor of tax incentives for hiring and one third said the government shouldn’t do anything.

The latest Govt stimulus package of $787 billion has raised the concern of further deficit. Three quarter of the respondents said that taxes has to be raised in the next six years for those people who are making $250,000. Some economists project about double-dip recession  because economy may decline further over the next 12 months.