The economies of Canada and the United States will grow about half as much in 2010 as they did in previous recoveries, according to a new forecast released Wednesday.

A group of five prominent Canadian economists, speaking at the Toronto-based Economic Club of Canada, said Canada and the United States will see gross domestic product growth of between 2.5 to three per cent in 2010.

"Not particularly vigorous for the first year following a recession. We normally in Canada and the U.S. after a recession grow by [as much as] five per cent — so somewhat tepid," said Don Drummond, chief economist for TD Financial Group and one of the experts who developed the forecast.

Drummond and the other bank economists — Craig Wright of the Royal Bank of Canada, Scotiabank's Warren Jestin, CIBC's Avery Shenfeld and BMO's Sherry Cooper — presented their predictions to a business audience of approximately 1,200.

Coming out of the darkness

Both economies are recovering after a difficult year in which financial markets seized up, businesses cut jobs and consumers stopped buying, the economists noted.

The experts also said they do not expect American consumers, who are the driving forces of the economy, to begin shopping again with the same unbridled passion as in past years.

"Everybody's view was predicated on the view that U.S. households would resume spending but at a fairly moderate pace relative to previous years," Drummond said.

"Will they spend their brains out again? Maybe they'll go out and buy a lot of things and hence have stronger growth in the short term," he said.

An aging population — intent upon increasing retirement savings — and higher per-capita debt levels likely will place a ceiling on rising consumer spending, the economists noted.

Retail recovery

The Canadian economists' forecast of a slow U.S. retail recovery received some support Wednesday from a well-considered U.S. research firm.

Retail Metrics Inc., a Massachusetts-based retail tracking firm, said it believed U.S. stores would post a sales gain of 1.8 per cent for the months of November and December.

The figures, which would include the crucial Christmas selling season, would be a vast improvement compared to the same two months in 2008, when sales fell by six per cent versus 2007, the company said in a press release.

"Clearly not a disaster like last year, but certainly not a ringing endorsement that the consumer is back," said analyst Ken Perkins.

Canadians feeling better

Besides its economic forecast, the Economic Club of Canada also produced a poll that revealed that Canadians surveyed were more optimistic in 2010 than in 2009.

The survey, conducted by Toronto's Pollara Strategic Research, indicated that 54 per cent of 4,263 respondents believed Canada's economy would grow during the year.

That contrasted to a mere 20 per cent who, in a poll one year earlier, thought 2009 would see Canada gain economically.

The poll also found that 17 per cent of people surveyed believed Canada to be entering a period of "modest" economic growth. That level was almost three times as great as the percentage of Canadians who expected moderate growth in 2009.

Pollara conducted the online poll between Dec. 6 and Dec.14 and says it is accurate within 1.5 percentage points 19 times out of 20.