Economists expect the pace of US growth to pick up in the year ahead as consumers and businesses alike accelerate spending, a new survey said.
The assessment by leading forecasters was set for release yesterday by the National Association for Business Economics (NABE). It finds them more bullish than when they were last surveyed in February, with a majority expecting the economy’s performance to exceed the long-term norm this year and next year.
The outlook amounts to an encouraging report card on the economy at nearly the one-year mark of the recovery, which the experts date to June last year when the recession hit bottom.
“Although risks involving Europe have recently escalated, the outlook in this country has improved in most respects,” said Lynn Reaser, the group’s president and chief economist at Point Loma Nazarene University. “Growth prospects are stronger, unemployment and inflation are lower, and worries relating to consumer retrenchment and domestic financial headwinds have diminished.”
While the economy is in “reasonably good shape,” she said, forecasters are extremely concerned about the impact of large federal deficits in the future.
The panel of forecasters lifted its expectations for growth this year to 3.2 percent real GDP, up from 3.1 percent in its February outlook. It also pegged next year’s growth rate at 3.2 percent.
Household spending, while still lagging the overall economy, is still expected to grow significantly this year. The forecasters attribute part of that to consumers being less thrifty, with the savings rate for this year seen dropping to 3.4 percent from the 4.6 percent they predicted in February.
Business investment is also expected to fuel the recovery. The economists expect higher operating rates and rising corporate profits boosting companies’ spending on equipment and software, while retailers restock inventory.
Unemployment is forecast to decline to 9.4 percent by year’s end and 8.5 percent by the end of next year.
Forecasters have scaled back their expectations for the housing growth after setbacks earlier this year. However, 65 percent of survey respondents said last year’s lows in home sales and home prices would not be retested.
The NABE survey of 46 professional forecasters was taken from April 27 to May 7.
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