Tue, Sep 30, 2014 - Page 15 News List

Economists tout steady recovery for US economy

AP

Economists see steady growth, but remain mixed on their outlook for the health of different segments of the US economy.

Investments by businesses and government, as well as international trade activity, will grow at a faster rate than previously forecast, according to a survey released yesterday by the National Association for Business Economics.

However, consumer spending and investments in homes will be lower than previously predicted due to the US’ lagging wage growth and trouble obtaining loans.

The predictions come in a quarterly survey of 46 forecasters that was conducted from Aug. 25 to Sept. 9.

Following an unusually high degree of volatility in the first half of the year, the group expects the pace of economic growth to be steady, with GDP forecast to grow at a seasonally adjusted annualized rate of 3 percent in the third and fourth quarters of this year and throughout next year.

Other predictions include:

‧ An average monthly gain of 228,000 nonfarm jobs this year, up from a forecast of 209,000 in the association’s last survey in June. Next year, the pace of job growth could slow to 211,000 a month.

‧ Workers’ pay could also increase, with salaries estimated to grow 2.8 percent this year, up from the 2 percent prediction in June. For next year, wages are now forecast to grow 2.6 percent.

‧ Industrial production should continue to pick up from the 2.9 percent growth recorded last year. Economists now estimate that it will be 4 percent for this year and 3.6 percent for next year.

‧ New home construction will not be as rosy. Last year saw an 11.9 percent increase in new home construction. In March, the economists were predicting 9 percent growth this year. By June, that was down to 3.8 percent and now stands at a paltry 2.7 percent increase. The economists think it will rebound next year to 9.2 percent growth.

‧ Predictions for home price growth remain unchanged at 5 percent this year and 4 percent next year.

‧ Nearly two-thirds of the economists surveyed say the biggest challenge to the housing market is the inability of prospective buyers to qualify for a mortgage. One quarter said the decline was caused by Americans today preferring to rent rather than own.

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