Exclusive: Economists surveyed see slow recovery

— -- The beginning of an economic recovery appears to be just a few months away but unemployment will continue to rise past 10% into next year, say economists surveyed by USA TODAY.

The results lend support to growing forecasts for a sluggish and jobless start to the recovery. The jobless rate will peak at 10.2%, according to the median estimate of the 49 economists surveyed July 16-22. That's up nearly a half-percentage point from the previous survey in April. The nation's unemployment rate hit 9.5% in June, a 26-year high.

About half of those surveyed said unemployment will peak in the first half of next year, while 16% said jobless rolls will swell into the latter part of 2010. The Federal Reserve forecasts unemployment peaking late this year at 9.8% to 10.1%.

The economy is expected to grow again during the second half of this year, and slightly more robustly than the April survey projected. Yet, the median growth-rate estimate of 2% for the fourth quarter is weak by historical standards.

"I think (the recovery) is going to be anemic," says Allen Sinai, chief economist at Decision Economics. He cites debt-laden consumers as the main obstacle.

"Households have to save a lot to fix their balance sheets before they can spend more," he adds. "I don't think consumers have the wherewithal to buy a lot of cars and a lot of houses."

Another factor slowing the turnaround is still-tight credit markets that will limit business expansion, UBS chief economist Maury Harris says.

Overall, 63% of the economists say the recovery will be slow and gradual. Those surveyed expect businesses to continue to cut spending until early next year. As a result, Sinai says, unemployment will continue to rise.

There are some bright spots.

Two-thirds of economists say existing-home sales have hit bottom. Consumer spending has stabilized. And CEO confidence shot up in the second quarter, the Conference Board said recently. Such signals are prompting 37% of economists to predict a moderate or fast recovery.