Many economic analysts are predicting a U-shaped recovery to the recession. The hope is that the recession will officially end this quarter, with a subdued recovery beginning by 2010. Then, there will be a period of growth at the end of next year. This model resembles the letter U, with the sharp descent to the bottom, where things are a bit slow for a period of time. Then, growth picks up and things improve markedly.

The U shape differs from a V shape. You can see that with a V shape, growth takes off right from the bottom. However, only the most optimistic of economists see a V-shaped economic recovery. MarketWatch reports on the larger number of economists expecting a U:

The others — about two-thirds of the group — expect a U-shaped recovery, with below-trend growth until late next year.

Consumer spending is likely to be weak through 2010, the economists said.

Most of the forecasters look for subdued inflation and stubbornly high unemployment through the end of 2010.

As you can see, there is a bit of a long road to be followed by the economy before we see substantial improvement. Indeed, while things are likely to stop getting worse, they won’t become noticeably better for quite a while. It would be wise to continue living frugally and make careful money choices.