"The economic downturn remains intense, but it is no longer intensifying," said Mark Zandi, chief economist at Moody's Economy.com. "We are still falling, but we are no longer crashing."

Zandi said the weekly number of new applications for unemployment benefits, a key measure of layoffs, has begun to level off at a very high point. The unemployment rate, however, will keep rising for the rest of this year and into 2010 since it measures layoffs and the ability of new entrants into the labor market to find a job, he added.

On the housing front, IHS Global Insight economist Patrick Newport is still forecasting further declines in construction, sales and prices. He expects existing home sales will bottom out in the second half of this year, partly reflecting a significant improvement in affordability.

With prices and mortgage interest rates both declining sharply, homes have become more affordable. But Newport expects sales to remain at depressed levels for another year as rising unemployment crimps demand.

IHS forecasts unemployment, currently at a 25-year high, will peak at 10.2 percent in the spring and summer of next year, Newport said. The latest jobless claims data suggest the unemployment rate for April will jump to 8.9 percent with employers cutting another 625,000 jobs. That report will be released May 8.

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