The U.S. is entering its steepest, most severe recession since the early 1980s, but the nation's productivity plus strong global demand for American commodities will revive the economy by late 2009.

Wells Fargo senior economist Michael Swanson delivered that forecast to 400 dairy producers and industry representatives at the Elite Producer Business Conference in Las Vegas this week. 

"Long term, I am bullish about the U.S. economy,” Swanson said. He projects a return to the long-term growth of the Gross Domestic Product at 3% or higher.

His bearish outlook for the near-term stems in part from consumers' fear of the unknown, which has deflated their desire to spend, he said. This year marks the first time since 1991 that the U.S. has seen a contraction in personal consumption spending.

In addition, businesses have taken on heavy debt and now need more equity to restore their strength. "They'll have to get costs under control to de-leverage their positions,” said Swanson.

Among those who must de-leverage are farmers, Swanson said. He foresees the cost of money increasing and asset values taking a hit. Lowering debt "has to be part of your goal, so you can call the shots, not your banker,” he said.

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