Economy Expected to Resume Growth This Year

According to the Congressional Budget Office, the economy will start growing in the second half of 2009, but it will be several years before the positive effects of a turnaround will be felt.

The CBO is updating its economic forecasts and will release new estimates in August. It is expected the new numbers will be less optimistic than the estimates the agency released in March.

The agency is expecting that the unemployment rate will continue to rise into the second half of next year and will peak at 10.5%. In March, CBO forecast unemployment would peak in the first half of next year at 9.5%.

The $787 billion economic stimulus package enacted in February is helping to boost GDP this year and, to a lesser extent, will do so in 2010 as well. Thereafter, economic growth will be hindered if private demand does not pick up.