Economy seen shrinking 2.2 percent in 2009: CBO

WASHINGTON (Reuters) - The U.S. economy is expected to contract 2.2 percent in 2009 before recovering in 2010 to grow 1.5 percent, the Congressional Budget Office said in new forecasts released on Wednesday.

“CBO anticipates that the current recession, which started in December 2007, will last until the second half of 2009, making it the longest recession since World War II,” the non-partisan budget analyst for Congress said.

The CBO also forecast that unemployment rate will continue a steep climb to 8.3 percent in 2009 and 9.0 percent in 2010.

With the housing crisis spreading across the country, CBO projected the average of home prices falling an additional 14 percent nationally between the third quarter of 2008 and the second quarter of 2010.

Reporting by Jeremy Pelofsky and Richard Cowan, editing by Doina Chiacu