Double Dip Recession Less Likely, But Forecast Remains Gloomy

12/29/2011 12:51 pm ET

The economy might avoid a worst-case scenario next year -- but that doesn't mean things are on track to go well.

In a poll published Wednesday by CNNMoney, economists put the chances of a double-dip recession in 2012 at about 20 percent. While high, that's still a better forecast than what many analysts were predicting this summer and fall, when the economy was showing minimal growth and the possibility of a national default seemed momentarily real.

Yet the economists surveyed by CNNMoney don't exactly offer a rosy vision of the year to come. The economy is likely to grow only modestly, showing 2.4 percent expansion for the year, they say. Unemployment will remain high, probably only coming down to 8.4 percent in a year's time from its current rate of 8.6 percent. And housing prices aren't expected to start rising again until 2013 at the earliest.

The survey results reflect a larger, sobering reality: while forecasters have largely backed off from the apocalyptic pronouncements that were common earlier this year, the economy still has a long way to go before it can be considered healthy again.

Unemployment -- one of the country's most pressing problems, playing a role in everything from the foreclosure crisis to Americans' deteriorating ability to afford basic living expenses -- is expected to maintain its historically high levels at least through 2012, as fewer than a quarter of companies say they plan to hire full-time employees next year.

The CNNMoney economists predict that companies will add about 1.6 million jobs in 2012. That would be just slightly more than the 1.4 million jobs added to the U.S. economy through November of this year, based on preliminary numbers for October and November made available by the Bureau of Labor Statistics.

The housing market is also likely to remain depressed for months to come, as another wave of foreclosures is expected to hit the market and keep prices at the same unnatural lows of the past several years. A struggling housing market has been linked to job growth woes.

Meanwhile, even as the economy is projected to grow modestly, it remains vulnerable to outside shocks, such as tightening credit markets as a result of turmoil in the eurozone. Economists say the situation in Europe, where multiple countries are trying to devise a way out of paying off their debts without triggering bank failures, wouldn't pose as great a risk to the U.S. if growth at home were stronger. But as it is, volatility abroad could easily damage the American recovery while it's still in its early stages.