Economist speaking at local event says U.S. poised for recovery

Expecting a decline in unemployment by the end of 2010, a St. Louis economist believes the U.S. economy is poised for a recovery.

"We're in the early stages of a recovery, and I think this recovery will be fairly strong," said Dr. Ken Matheny, a senior economist with Marcoeconomic Advisers.

A crowd of 80 people that included bankers, elected officials, business owners and students attended Matheny's discussion on the rebound of the economy at the Show Me Center. He previously appeared in March 2009 to provide his overview of the state of the economy.

Matheny believes the unemployment rate that peaked at just more than 10 percent in October will fall to around 9.3 percent by the fourth quarter of 2010. January's unemployment rate was 9.7 percent, according to the Bureau of Labor Statistics.

"There is some noise in that number," Matheny said. "I think that number will go on a sustained downward trend, but it will be very gradual."

When February's unemployment rate is released this morning, Matheny said, he expects the recent snowstorms in the Northeast to play a part in an expected increase in the number of workers not employed. But Matheny said he is cautious to rely on any one month because it does not properly represent a certain upward or downward trend.

Matheny said it was possible the blizzards depressed employment temporarily. "The big decline in payroll employment could be reversed in March. Aside from [today]'s report, we think labor markets are on the cusp of turnaround."

In addition to affecting unemployment, Matheny said, the weather also affected the ability for the gross domestic product to increase more than it did. The GDP, which measures the total market value of goods and services produced in the U.S., rose at an annual rate of 5.9 percent from the third quarter to the fourth quarter in 2009.

Matheny expects the GDP to grow by about 3.5 percent in 2010.

One contribution to the GDP's growth, Matheny said, was a rebound in motor vehicle production and stabilization of home prices. The Associated Press reported that sales of Ford, GM, Nissan, Honda, Hyundai and BMW all increased by double digits in February compared to February 2009. Ford said it plans to increase production by 32 percent in the second quarter while GM declined to reveal its production

plans.

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