The nation and state are rising from a recession; however, unemployment rates are expected to rise in 2002, a Kansas University economist said Tuesday.

KU economist David Burress predicted Tuesday that both the national and state unemployment rate would increase to about 5.5 percent in 2002, up from just below 4 percent in 2001. He spoke during the Lawrence Chamber of Commerce Economic Forecast Luncheon at the Hereford House, which was attended by about 40 people.

Kansas University economist David Burress, a speaker at the Lawrence Chamber of Commerce Economic Forecast Luncheon, says a strong economic recovery isn't likely in 2002. About 40 people attended Tuesday's luncheon at the Hereford House, 4931 W. Sixth St.

“This news doesn’t mean we’re not coming out of the recession, it just means we’re not coming out of it very well,” Burress said. “It won’t be a strong recovery. It will be a weak recovery.”

Burress said he expects the unemployment numbers to increase because many people who quit actively seeking a job during the recession now will decide to get back into the job market as signs of a recovery emerge.

“But this recovery isn’t going to happen fast enough to put all those people back to work,” Burress said. “It’s pretty typical that unemployment actually rises a little bit after a recession, but I think this time it may be a little worse than usual.”

He said a slower-than-normal recovery is anticipated, mostly because consumers won’t increase their spending as much as they typically do following a recession. Burress said that is because most consumers didn’t significantly cut back their spending during the recession, but instead just increased their amount of credit card and other debt.

“People are beginning to realize they don’t have as much money to spend anymore,” Burress said. “People are maxed out on their debt, and that has finally started to scare some people.”

The slow recovery should produce some positive benefits, Burress said. He said the inflation rate in 2002 should be less than 2 percent for the entire year, meaning consumer dollars should be able to stretch a little farther. Interest rates also should stay near their current levels.

“We’re projecting that the Fed will keep the interest rates down because they know this recovery is going to be slow,” Burress said.

Chamber President Bill Sepic said he saw a moderate recovery for the Lawrence economy as well.

“Do we see double digit growth? Probably not this year,” Sepic said. “But we do see us coming out of the recession and we should see some slow, steady growth locally.”

Burress and fellow KU economist Luke Middleton made several other predictions about the 2002 economy including:

The construction industry should have the fastest job growth rate in the state, increasing its employment levels by about 3.6 percent. Job growth in other industries across the state will be sluggish. Retail trade is expected to grow by only 1 percent, the service sector at 0.6 percent and state and local government jobs at 0.7 percent. The durable-good sector is expected to decrease its work force levels by 3.3 percent.

Wages and salaries across the state are expected to grow by about 3.4 percent, compared to 5.3 percent in 2001.

Nationally the gross domestic product is expected to increase at a rate of slightly less than 3 percent for the year.