It is the season for economic forecasts, and I have been polled by several published surveys. Here is my response.

Growth

Generally, the outlook is for mediocre growth -- a tad less than 3% -- and unemployment not to improve much.

The Federal Reserve will not raise the target federal funds rate until at least after the mid-term elections.

Unemployment will peak this quarter or next close to 10% then decline only gradually. Growth well above 3% or a wholesale decline in adult participation in the labor force is needed to pull the unemployment rate down significantly.

Double Dip?

The chances of a double dip recession are just below 50%. If the EU patch for Greece and others holds, then the economic expansion will continue in the United States, affected but not derailed by troubles in Europe. If a bank contagion ensues, all bets are off, grab a combat helmet and hit the trenches.

It would very interesting, though terribly tragic, to see how President Obama and Secretary Geithner apply too big to fail a second time around. The Bush and Obama administrations could have resolved Citigroup and AIG -- they didn't need new legislation because the government essentially bought control and assumed their debts -- and the government did not need to negotiate lower payouts for Goldman Sachs and others. They could have simply imposed those as they did to Chrysler's bank creditors.

Stock Market

If U.S. growth continues near 3%, the stock market will recover and reach new highs -- the Dow will rocket to 13,000.

If growth languishes between 1.5 and 2.5%, equities will recover but that is about all. I don't see growth at less than 1.5% without a wholesale derailing of the recovery.

To some considerable measure the outlook is binary -- the patch in Europe holds or it doesn't.

Quarterly Forecasts (percent)

Professor Peter Morici, of the Robert H. Smith School of Business at the University of Maryland, is a recognized expert on economic policy and international economics. Prior to joining the university, he served as director of the Office of Economics at the U.S. International Trade Commission. He is the author of 18 books and monographs and has published widely in leading public policy and business journals, including the Harvard Business Review and Foreign Policy. Morici has lectured and offered executive programs at more than 100 institutions, including Columbia University, the Harvard Business School and Oxford University. His views are frequently featured on CNN, CBS, BBC, FOX, ABC, CNBC, NPR, NPB and national broadcast networks around the world.