WATERLOO - From an economic standpoint, consumers can expect three negative effects from the current economic downturn in the next year, economist Ernie Goss told a gathering of local business people Tuesday.

"Individuals have to brace themselves for three things in 2010: higher inflation, higher taxes and higher interest rates," Goss said. "I don't see any way around them. It may be the latter part of 2010. It may be the early part of 2010. But on short-term interest rates, three years and less, you'll see those move higher earlier, maybe as early as the first quarter of 2010."

Long-term rates - used in mortgages - may take "a bit longer," Goss asid.

Goss offered his thoughts to a gathering from the business community at the 2009 Economic Outlook luncheon at the Elks Club.

Goss, professor of economics at Creighton University in Omaha, Neb., and director of the Goss Institute in Denver, Colo., said the Cedar Valley and national economies, which have been basically running on separate tracks, are converging a bit.

"What we're seeing, of course, is the national economy is doing much worse than the regional economy, the Iowa economy and the (local) economy," he said. "Now, we see that gap closing. We're seeing the U.S. economy picking up."

Someone asked Goss when the recession would end.

"We're out of it already," he said. "The economy and gross domestic product is already expanding. Obviously, there are pockets across the country that are not out of it."

He is calling it a "jobless recovery."

"We're almost at the end of unemployment increases," said Goss, who several years ago was a visiting scholar with the Congressional Budget Office and has handled a number of consultancies with government agencies. "It may go a little bit higher in Iowa."

The national unemployment rate, currently at 9.7 percent, likely will increase a couple of notches, Goss said.

However, jobless rates nationally likely won't go much higher than 10 percent before improving, Goss said.

Food processing is a strong area of the economy right now, Goss said.

"Even though farm income is down, it's still underpinning the overall economy," he said. "Housing is looking a little bit better, but in this part of the country, housing didn't get whacked, anyway."

Commercial real estate is the "weakest part of the economy," and it's weakening locally and regionally, Goss said.

Retail sales likely won't improve for the upcoming Christmas holiday shopping season. "It's bound to be the lowest in two decades," he said.

The banking sector remains strong regionally, however, "despite what we're seeing nationally going on with the delinquency rates," Goss said. "We're just not seeing that here."