LIANE HANSEN, host:
This is WEEKEND EDITION from NPR News. I'm Liane Hansen.
2010 could not have ended soon enough for the millions of Americans who spent the year struggling to find jobs or avoid foreclosure notices. Now it's a new year, and lots of economists are seeing reasons for optimism.
Joining us to discuss those economic predictions is NPR's senior business editor, Marilyn Geewax. Marilyn, welcome back, and happy new year.
MARILYN GEEWAX: Thanks, Liane.
HANSEN: Will it be a happy new year? Will 2011 really be better than 2010?
GEEWAX: Let's hope so. This economic downturn started more than three years ago, and although the official recession is over, it just doesn't feel that way to a lot of Americans. We've had a painfully slow recovery. We still have so many people facing foreclosures, searching for work. But increasingly, economists say they see the evidence that growth is picking up.
In recent weeks, they've been raising their gross estimates, and at this point, the mainstream view is that the economy is going to grow at about three to three-and-a-half percent in 2011. That's vastly better than where we were a couple of years ago.
Remember when President Obama came into office, two years ago this month, the economy was shrinking by more than six percent. So without question, we're really in much better shape heading into 2011, but - and this is a very big but - three percent growth is still way too slow to create enough jobs to soak up those 15 million Americans who are looking for jobs. And to get the jobs market really going again, we need to have about 300,000 to 400,000 jobs created every month. And that's ten times the number of new jobs that we saw in November.
HANSEN: What about housing?
GEEWAX: The consensus view is that housing is moving into a recovery, but most of the improvement won't come until later in the year.
Last week, Mark Zandi, the chief economist for Moody's Analytics, shared his outlook with NPR.
Mr. MARK ZANDI (Chief Economist, Moody's Analytics): Well, housing hits bottom in 2011. It's been a five year road south. It's been a complete cratering of the market, but I think 2011 marks the end of that crash. We've got more price declines to go. We got a fair amount of foreclose property that are still going to come to market, but by summer-fall, I think the price declines will be over. By the end of the year, we'll have price stability, and by 2012 some price growth.
HANSEN: That's Mark Zandi, the chief economist of Moody's Analytics talking about the housing market. I'm speaking with Marilyn Geewax, NPR's senior business editor. Marilyn, what are the economic wild cards?
GEEWAX: Consumer prices and interest rates. Both of those could hold a lot of surprises for us. Some economists are still fearing deflation. In 2010, for the most part, inflation was very tame, so there's still this lingering fear the consumer demand could be so weak that prices could fall. And anybody who's seen the value of their home decline in recent years knows how painful deflation can be.
But other economists are worried that prices are about to shoot up. We've got oil prices rising sharply, crop prices have jumped up, too, and we could see significant food and fuel inflation in 2011. If U.S. consumers end up having to spend more on their gasoline and groceries, then there's less money for things like making the mortgage payment, buying clothes, going on vacation. All of that could really hurt the economy.
And then there's the interest rate puzzle. The Fed's been trying to restrain interest rates, but you know, we see mortgage rates rising in recent weeks, and some economists fear they could really take off in the coming year.
HANSEN: Finally, Marilyn, what about the stock market?
GEEWAX: The stock market was so volatile in 2010 that a lot of small investors were left feeling pretty discouraged and confused. But now, forecasters are saying that stocks are going to do really well in 2011 and we could see gains of 10 percent, maybe 20 percent.
And historically, the third year of a presidential term is a pretty good one. But there are always risks. Prices could plunge because of profit-taking, there could be some currency crisis.
So the stock market still feels pretty scary to most of us, but as I said, economists are not really focused on those risks and dangers for 2011. For the most part, right now, the outlook is positive with lots of forecasts out there calling for decent economic growth, fairly stable consumer prices and rising stock prices. So Liane, happy new year.
HANSEN: Indeed. NPR's senior business editor, Marilyn Geewax. Thank you, Marilyn.
GEEWAX: You're welcome, Liane.