The recession may be over, but local economists foresee only modest gains in stocks, employment and other key indicators.

This December marks a year since the Great Recession officially ended. But most businesses and consumers are still holding their breath-and their money: Weak growth, high unemployment and stagnant home values have caused some economists to predict a double-dip recession.

Surveys from the Wall Street Journal and CNN show that 22 percent and 25 percent of economists, respectively, predict the U.S. economy will experience another recession. The country has never experienced a true double-dip, according to the National Bureau of Economic Research, but came close during back-to-back recessions in 1980 and 1981.

Fears of a double-dip are starting to shrink, says George Mokrzan, senior economist at Huntington National Bank. "I would have said a one-in-four chance in the summer," he says. "I'm pulling back my recession concerns. I think we could still have a recession if there is some catalyst, some shock to the economy that's negative at this point. ... The risk of the economy not being able to stand those shocks will continue to decrease as time goes on."

Bill Lafayette, vice president of economic analysis at the Columbus Chamber, agrees: "Economists are less worried about it now than they were three months ago. Things are beginning to solidify very slowly. We're seeing good growth in business investment, equipment and software, which boosts productivity. Consumer expenditures are coming back slowly.

"Recovery is becoming internalized. It's shifted from being dependent on stimulus to being dependent on internal growth, which is a good thing."

Mokrzan says a significant economic shock-an intensification of Europe's credit crisis, for example-could cause a double-dip. Jim Newton, chief economic advisor with Commerce National Bank, says bad policies or huge spending cuts by government could also restart the recession. "I don't think that's where the odds are yet. I think that we're still likely to see very, very modest growth in the first half and then it will slowly build a little bit of strength," Newton says.

Increases in health-care costs and taxes will hinder consumers, and many people who have been receiving unemployment benefits will hit the 99-week limit, Newton says. "My best guess is if you look at 2011 compared to 2010, Columbus will do precious little better than simply tread water," he says. "Employment levels may go up a little bit, they may fall. It should not be viewed as a year of recovery."

Central Ohio's unemployment rate was 8.2 percent in September, down from 8.6 percent a year ago, according to the Ohio Department of Job and Family Services. The statewide rate fell to 10 percent from 10.7 percent in September 2009.

As of August, Columbus had gained an anemic 2,900 jobs since December 2009-a 0.3 percent increase, Lafayette says. Compared to a 0.55 percent national average and the state average of 0.65 percent, Central Ohio has been very soft. "I think employment will continue to strengthen through 2011," Lafayette says. Just don't expect a return to the pre-recession levels of December 2007 overnight. "It's going to be a while before we make back everything that we lost," he says.

"We're getting deeper into the recovery and more businesses, in order to generate more profit, will have to produce more goods and services to make a profit. That means hiring more workers," Mokrzan says.

Newton is less optimistic: "We may even see the unemployment rate start edging back up because a lot of people who dropped out may try to re-enter. It's been artificially down due to discouraged workers for months."

Newton also expects weaknesses in construction, manufacturing and retail in 2011. "There may be a tiny rebound in residential construction, but it won't amount to much. Foreclosure will continue to be high, with maybe a second wave as employee opportunities continue to be slack," he says. "We've seen a bit of a bounce [in manufacturing], but a lot of what we saw was inventory rebuilding, and that's coming to an end. Once it does, we may see a lot of those activities that seemed positive in 2010 fade away."

Mokrzan disagrees, citing manufacturing as a likely strength, particularly in capital equipment orders. "The dollar has become cheaper and that has been positive for exports, but the story goes deeper. It's also a story of a worldwide economic recovery," he says.

Lafayette foresees growth in business services and transportation, and also in retail. "We went through a tremendous bloodbath in retail employment and downsizing in the industry locally over the last decade. At this point, the ratios are really where they ought to be, so retail is a segment that I think has some upward potential once the recovery really gets going," he says.

The news is not as good for residential real estate. "I think the existing housing market is going to be doing a little better. As prices start to firm, there's all this pent-up supply that will hit the market in waves, and it will keep prices from rising for a while," Lafayette says.

"Housing has been so atrocious for the past couple of years that we may see an uptick in housing, but a pretty mild impact in the grand scheme," Newton says.

And the stock market? "I think businesses are going to be under tremendous strain. For the past couple of years, they've been able to keep profitable relatively due to productivity from their workers. They weren't passing that factor on in terms of higher wages, just letting its impact fall straight to the bottom line. It will be much more difficult to do that in 2011, which will put profitability under some strain. We might not see much action in broad-based stock," Newton says.

"The underlying fundamentals are improving in some ways," Mokrzan says. "Earnings growth, overall maturity of the economy and world economic recovery should also improve next year."

Reprinted from the December 2010 issue of Columbus C.E.O. Copyright © Columbus C.E.O.