A new economic forecast calls for the US economy to make some modest growth strides this year, but not quite enough to significantly reduce the number of jobless Americans looking for work.
About two-thirds of the economists who participated in the latest National Association for Business Economics (NABE) survey expect the US’ GDP to grow at a rate above 2 percent this year, according to the outlook released yesterday.
“That is not the sort of GDP growth that’s really going to dramatically improve our labor market, but it’s certainly not going to make it worse,” Nayantara Hensel, professor of industry and business at National Defense University and chair of the NABE survey, said in an interview.
GDP growth needs to be above 3 percent to significantly lower unemployment, which is at its lowest rate in nearly three years, but remains at a troubling 8.5 percent.
The NABE economists previously forecast growth of 1.8 percent for all of last year. Final GDP numbers for the last three months of last year are due out on Friday.
The recent improvement in the unemployment rate, a pickup in retail sales during the holiday season, and hopefulness that Congress will be able to reach a debt reduction deal, are among the factors behind the rosier GDP outlook among better than 60 percent of the survey respondents.
Almost two-thirds of respondents said they expect no change in employment, the highest share of survey participants to hold that view in recent quarters. And the share of those who expect hiring to pick up in the next six months declined to 27 percent from 29 percent in the previous survey.
That doesn’t bode well for new job growth, but it also suggests employers don’t expect to slash payrolls further.
A majority of the respondents said wages and salaries are unchanged, while nearly all expect either no change in prices or increases by their companies of 5 percent or less.
The holding pattern on prices could reflect a caution on the part of businesses due to uncertainty in the economy, given the burgeoning debt crisis in Europe, rising tensions with Iran and the potential for higher oil prices, Hensel said.
On the sales front, about 81 percent of the survey participants, which include some company managers, said sales were either unchanged or rising along with profit margins. However, 19 percent said sales were falling.
About 63 percent of the NABE forecasters on the panel expect that there will be no impact from the European debt crisis on sales over the next six months. While about 29 percent reported sales fell 10 percent or less due to the region’s lingering debt woes.
The survey was conducted between Dec. 15 and Jan. 5. It is derived from responses given by 63 NABE members.