Economists are increasingly confident that some pillars of the US economy will improve this year, but they still remain cautious in their expectations on the overall pace of economic growth.
The National Association for Business Economics (NABE) said yesterday that forecasters have raised their expectations for employment, new home construction and business spending this year.
The latest forecast is in line with one issued by the group in November last year that called for the economy to grow 2.4 percent this year.
Forecasters predict growth will be stronger in the second half of this year than it will be through June.
However, they held on to their average prediction that America’s GDP will grow at a rate of 2.4 percent. That’s a slight improvement from last year, when economists believe the economy grew 1.6 percent. Final economic growth numbers for last year are due tomorrow.
NABE economists see the unemployment rate sticking at 8.3 percent this year. That’s improved from their November forecast of 8.9 percent.
The economists expect job growth to accelerate next year, and forecast the unemployment rate will fall to 7.8 percent. GDP growth needs to be above 3 percent to significantly lower unemployment.
The economists predict builders will break ground on 700,000 homes this year, up 15 percent compared with last year.
In November, they expected new home construction of about 660,000. They predict 850,000 will be built next year.
Panelists are also still forecasting strong business spending growth this year. They’ve slightly raised their forecast to 8.1 percent growth this year.
For next year, spending should slow slightly, but still remain strong at 7.3 percent, the forecast said. Industrial production is expected to increase moderately at 3.5 percent this year and 3.3 percent next year.
Despite a brightening forecast for employment, housing and business spending, the NABE Outlook Panel of 45 economists expects consumers to continue to penny-pinch this year. They still predict spending will increase just 2.1 percent this year and 2.3 percent next year.
The rate is below historical average of 2.8 percent, highlighting an economy that’s heading in the right direction, but still slow going.
Economists have lowered their expectations for exports this year as well.
They now expect 4.6 percent growth this year, compared to their November prediction of 6.1 percent.
Their projection for import growth this year was also lowered from 4.3 percent to 3.5 percent. They expect both rates to improve next year.
Overall, economists say they are more confident in their predictions than just a few months ago.
Less than half of economists surveyed by the NABE this month call their forecasts “somewhat uncertain” or “much more uncertain than usual.”
In November, more than two-thirds of respondents characterized their predictions as uncertain.
The survey was conducted from Jan. 26 to Feb. 8.