Ann Arbor (WWJ)  -- Economists at the University of Michigan confirmed Thursday what many Americans already believe--that the U.S. is in a recession.

Experts told WWJ's Ron Dewey that conditions will bottom out in mid-2009 with only modest economic growth expected in 2010 and unemployment hovering above 8 percent throughout that year.

"The decline in employment that began at the turn of the year raised the specter of recession," said U-M economist Joan Crary. "Until the credit markets seized up, however, it appeared that the economy might squeak by with a 'growth' recession, enduring a period of job loss and very sluggish growth, but avoiding a full-blown recession. The financial crisis tipped the balance, curtailing economic activity and plunging the economy into a downturn.

"While the current financial crisis is an extreme event that has raised fears of economic collapse, we are not forecasting economic catastrophe but rather a recession that is best characterized as moderately severe. And that moderate severity stems from the early enactment of a significant package of fiscal stimulus measures, including infrastructure spending and tax cuts."

The U.S. is also expected to lose about 2.4 million jobs over the next year-and-a-half before starting to see significant employment gains in late 2010.  Crary and colleagues, though, say that it won't be as harsh as the recessions of 1974-75 and 1981-82, but it will be more severe than the 1990-91 and 2001 downturns.

Meantime, housing prices will fall 14 percent this year and 6 percent in 2009. New housing starts will reach a low of 836,000 units next year, but improve to 941,000 in 2010---still about 24,000 less than the current year and less than half the 2005 total of 2.1 million. Existing homes sales will continue to drop from nearly 5 million last year to 4.4 million this year and 4.15 million next year, before stabilizing in 2010.

The U-M forecast is based on the Michigan Quarterly Econometric Model of the U.S. Economy and compiled by the U-M Research Seminar in Quantitative Economics. For more information, click here.

Friday, the experts will unveil their outlook for the Michigan economy.