Submitted by CARPE DIEM

In their annual summer forecast of the U.S. economy, University of Michigan economists say that three factors have helped our economy stave off a full-blown recession: 1) strong and timely action by the Federal Reserve to prevent financial collapse, 2) temporary tax breaks for households and businesses, and 3) strong demand for our products abroad.

The U-M economists predict annualized increases in real GDP growth of 2.6% in the first half of 2009, 3.3% in the second half and 3.6% during 2010. This translates into an increase of 900,000 payroll jobs during 2009 and 2.6 million jobs during 2010, after a loss of 700,000 jobs this year. Even so, the unemployment rate will increase next year to an average of 6.3%, but will fall to 5.6% by the end of 2010.

Along with the creation of 3.5 million jobs, rising GDP and slowing consumer price inflation over the next two years, the U.S. economy will show some signs of improvement in the housing market, oil prices and vehicle sales.

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