While the U.S. economy will grow at a modest clip in 2011, housing prices likely will languish and unemployment will remain high, according to forecasts by University of Chicago Booth School of Business professors at a luncheon presentation today.
Growth in the gross domestic product could reach 3.4 percent, exceeding the consensus of economic forecasters, according to economics professor Randall Kroszner, who was a governor of the Federal Reserve System from 2006 to 2009.
“I don’t agree with those who say we are in an extended period of low growth, but we are unlikely to have a powerful recovery either,” he said.
Consumer spending is coming back to some degree, the personal savings rate is not expected to increase and business productivity growth should continue, he said.
Hiring will remain sluggish, he said, because businesses are uncertain about future tax and health-care costs.
“Unemployment will still be above 8.5 percent a year from now,” said Erik Hurst, another economics professor at the Booth School. The current rate is 9.6 percent.
And if there is any good news for housing, it is that the sector is not expected to worsen, said Raghuram Rajan, a professor of finance at the school.