U.S. growth prospects deemed bleak in new decade..

ATLANTA (Reuters) – A dismal job market, a crippled real estate sector and hobbled banks will keep a lid on U.S. economic growth over the coming decade, some of the nation's leading economists said on Sunday.

Speaking at American Economic Association's mammoth yearly gathering, experts from a range of political leanings were in surprising agreement when it came to the chances for a robust and sustained expansion:

They are slim.

Many predicted U.S. gross domestic product would expand less than 2 percent per year over the next 10 years. That stands in sharp contrast to the immediate aftermath of other steep economic downturns, which have usually elicited a growth surge in their wake.

"It will be difficult to have a robust recovery while housing and commercial real estate are depressed," said Martin Feldstein, a Harvard University professor and former head of the National Bureau of Economic Research.

Housing was at the heart of the nation's worst recession since the 1930s, with median home values falling over 30 percent from their 2005 peaks, and even more sharply in heavily affected states like California and Nevada.

The decline has sapped a principal source of wealth for U.S. consumers, whose spending is the key driver of the country's growth pattern. The steep drop in home prices has also boosted their propensity to save.

"It's very hard to see what will replace it," said Joseph Stiglitz, Nobel laureate and professor of economics at Columbia University. "It's going to take a number of years."

One reason is that U.S. consumers remain heavily indebted. Consumer credit outstanding has fallen from its mid-2008 records, but still stands at some $2.5 trillion, or nearly one-fifth of total yearly spending in the U.S. economy.

Another is that many of the country's largest banks are still largely dependent on funding from the U.S. Federal Reserve and the implicit backing of the Treasury Department.

Kenneth Rogoff, also of Harvard, argued that if the U.S. government ever "credibly" pulled away from its backing of the financial system, then a renewed collapse would likely ensue.

He cited government programs giving large financial institutions access to zero-cost borrowing as artificially padding their bottom lines.

"There's something of an illusion of profitability," he said.

http://news.yahoo.com/s/nm/20100104/bs_nm/us_usa_economy_dismal

Where is the 4-5% growth in GDP promised by this administration when they were ramming the stimulus bill down our throats.. Don't worry about the deficits or debt, our plan will create surpluses and cut the deficit in half by 2012.. UH... Sorry.. CBO projects 7.1 Trillion in budget deficits from now until 2019.. So sorry..

just a local anecdote that is relevant

The state of Texas and the Feds have both dedicated parts of the stimulus money to build a carbon clean coal power plant here, around 500 million bucks

they are breaking ground this coming summer and will employ 1500 people in the construction

the plant will employ 400 people full time begining in 2014

so we are getting a bit of growth

EDIT: also come to think of it, Gov Bill Richardson (New Mexico) just signed a bill providing funds for New Mexico to build a "smart power plant" in Clovis, New Mexico which will interconnect the northern power grid with the southern and western power grid

this is a big deal because all these wind farms being built have stalled out due to a lack of distribution capability. The New Mexico power plant will provide the incentive for the continued development of wind power in the west. so there'll be some growth there too

That is a cost of $1.25 million per job.. Wouldn't we have been better off just giving 400 people $500,000 each and saved $300 million?

$500 million for 400 jobs....

Its ok with me unless the rats get the work . we need the work .

Colorado actually had a positive on job growth but it was a small number but positive is better than negative.

I ell ya what..right now...Michigan would be glad to see ANY kind of growth.