by Jing Zhao Cesarone
CHICAGO, March 12 (Xinhua) -- The U.S. economy has gone through its worst days over the last two years and will "come out of this mess" with some degrees of improvement in 2010, a U.S. economist has said.
Maria Fiorini Ramirez, president & CEO of Maria Fiorini Ramirez, Inc., (MFR), an independent global economic and financial consulting firm, made the comments in an interview with Xinhua on Thursday.
Regarding the outlook of the U.S. economy in 2010, she predicted that "the growth will be modest and we look for a 2.7-percent real GDP growth this year."
"We need more time to clean up the over-burdened consumers. Balance sheets are still in the process of getting healthier and this will limit economic growth," said the economist.
Added to this, she said, is an "uncertain regulatory and fiscal environment that is making business more cautious in taking risk and investment."
According to the Monthly U.S. Economic Chartbook from her firm, MFR, U.S. core inflation is expected to decelerate this year in the face of a very wide output gap. In 2011, there will be a modest acceleration in core inflation, while fear remains that inflation may be the only escape from the debt morass.
In terms of the interest rate, the chartbook forecasts that the Federal Reserve (Fed) will begin tightening monetary policy this summer, and there will be a reasonably steady stream of interest rate increases that will lift the Fed funds rate to 1.25 percent by the end of this year.
The U.S. unemployment rate stood at 9.7 percent in February as employers shed fewer jobs than expected, according to official statistics.
When asked if this is an evidence that the job market may be slowly healing, Ramirez said, "I think the worse is behind us but it is going to take a long time for the job market to improve."
She continued, "the unemployment rate may go up as more people who were totally out of the labor force now come back looking for a job and do not get one quickly. This may result in an increase in the unemployment rate. "
