The Recovery Is Beginning to Take Shape

We believe the recession ended around the middle of this year and that a recovery has begun to take hold. Real GDP is expected to rise at a 3.4 percent pace in the third quarter and average a 3.0 percent pace for the second half of this year. The improved outlook reflects recent revisions to the underlying GDP data and a sharp reduction in inventories. The initial success of the cash for clunkers trade-in program has also bolstered our outlook for consumer spending. Aside from these changes, our forecast remains close to its earlier track.

Private domestic demand is expected to remain weak throughout the first year of the recovery, averaging just a 1.0 percent pace. Consumer spending will be constrained by rising unemployment, sluggish income growth, declines in household wealth and higher taxes, particularly at the state and local level. Outlays for plant and equipment will also take some time to recover. Businesses are awash in excess capacity and continue to focus on strengthening their balance sheets. Commercial construction will be another drag on economic activity during the early part of the recovery but homebuilding appears set to make a slight positive contribution to growth.

The sluggish start to the economic recovery should allow the Federal Reserve to keep short-term interest rates on hold through the middle of next year. Once the risks of the economy backsliding have passed, the Fed will move quickly to bring the federal funds rate back to a neutral level.

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Managed IT services for disaster recovery and business continuity

Midmarket CIOs are signing on to managed IT services for disaster recovery (DR) planning and business continuity (BC) services. With the right DR/BC plan in place, employees can begin working as soon as possible in the event of a disaster. But finding the appropriate strategy, and focusing the business around it, can be a challenge.
From weighing the risks and benefits of using managed IT services for disaster recovery and business continuity plans to understanding available options and contract terms, get the low-down on DR/BC services.

For free advice and resources on more IT and business topics, visit our list of Midmarket CIO Briefings.


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