Recovery may be slowest since '40s

WASHINGTON: The US recovery may be the slowest since World War II to regain all the ground lost during the recession, even if economists' more optimistic forecasts for expansion turn out to be right.

The slump this time was so deep, said JPMorgan Chase & Co chief economist Bruce Kasman, that the 3.5 percent average quarterly growth rate he sees in the next year won't be enough to bring gross domestic product back to its $13.42 trillion pre-crisis peak. That's in contrast with the last 10 recoveries, when GDP returned to its previous levels within 12 months.

The result: A year after the Lehman Brothers Holdings Inc bankruptcy helped drive GDP down to an annualized $12.89 trillion in the second quarter, there's still "plenty of malaise", Kasman said. Unemployment may remain close to the current 26-year high of 9.7 percent through 2010, upsetting voters ahead of mid-term Congressional elections and forcing officials to keep interest rates near zero and the budget deficit around this year's record $1.6 trillion.