The US economy would bottom out by this summer before making a modest recovery next year, according to a forecast released on Wednesday.

"For now, we think the economy might reach bottom by this summer," said Nancy Sidhu, a chief economist at the Los Angeles Economic Development Corporation (LAEDC), which examines industry trends.

"This recession officially began in December 2007, so this would make it some 19 to 21 months long -- the longest downturn since World War II," Sidhu said in the company's 2009-2010 forecast.

The LAEDC forecast that the US economy would shrink by 2.9 percent in 2009 and then grow about 1.5 percent in 2010.

According to the forecast, inflation in the United States is unlikely to be a problem in the near term, declining by 1.8 percent in 2009; the auto and housing industries will remain in limbo throughout 2009; and US annual nonfarm employment will drop by 4.4 million jobs this year, when the unemployment rate will average 8.7 percent prior to increasing to 9.5 percent in 2010, with the newly enacted stimulus package starting to have a positive impact by year-end 2009.

California's prospects are also grim, according to the LAEDC.

"As 2009 began, California was in the throes of a serious recession, and the economic news during 2009 will be mostly bad," Sidhu said.

"The five Southern California metro areas will continue to struggle in 2009," said Jack Kyser, founding economist at the LAEDC's Kyser Center for Economic Research. "Job losses will continue in construction, manufacturing, retailing and financial services."

International trade activity was expected to remain weak until 2010, while tourism and the real estate industries take a hit, according to the forecast.

Local governments will feel the dual pinch of declining revenues from local taxes coupled with funding cuts from the state government, said the forecast.

It also predicted that the federal economic stimulus package, particularly the infrastructure component, would be a boost to Southern California's economy, but not until toward year's end.

(Xinhua News Agency February 19, 2009)