The US economy will gain strength in the second half and keep accelerating into next year when it will expand by the most in four years, a private survey of economists showed.
US GDP will rise at a 3.7 percent pace in the current quarter and at a 3.8 percent rate in the final three months, according to the average forecast of 54 economists surveyed Aug. 4 and Aug. 5 by Blue Chip Economic Indicators of Kansas City, Missouri.
In the last survey, economists had expected a 3.6 percent increase in third-quarter growth.
Economists raised their third-quarter estimate because the Federal Reserve's benchmark overnight bank lending rate is at a 45-year low, corporate profits have risen five straight quarters for Standard & Poor's 500 companies, and the US government has cut taxes.
"Expectations remain high that the US economy is finally poised to post sustainable real GDP growth," the Blue Chip report said. "A flurry of recent statistical reports and private-sector surveys has reinforced earlier signs that the expansion began to strengthen as the second quarter came to an end."
The results are similar to the findings of a Bloomberg News survey, released last Friday. The Bloomberg poll of 55 economists, between July 31 and Aug. 7, found median forecasts of 3.6 percent for next year. The economy last grew as fast in 2000, when it expanded 3.8 percent.
The polls sample different groups of economists. They overlap on some.
The economy will expand 3.7 percent next year after a 2.3 percent gain this year, according to the average Blue Chip forecast. GDP grew at a 1.9 percent annual rate in the first half of this year, as industrial production and consumer confidence dropped during the Iraq war.
The US will continue to outperform Europe and Japan. The euro-area economy, the world's second-biggest after the US, will expand 1.9 percent next year after growing 0.6 percent this year, the forecasters said. Japan, the world's third-largest economy, will expand 0.9 percent this year and 1.1 percent next year, they said.
More than half the forecasters said the Fed won't change rates until next June. Ninety-seven percent said policy makers are done cutting rates.
"Recovery signs suggest that the Fed is unlikely to ease monetary policy again," said Richard Berner and David Greenlaw, economists with Morgan Stanley in New York, in the report.
"But with inflation still at the low end of a 1 percent to 2 percent range, and deflation risks not completely behind us, tightening is unlikely any time soon," he said.
That's in part because the US recovery will be slow to drive down the unemployment rate. The jobless rate will average 5.9 percent next year after averaging 6.1 percent this year, according to the survey.
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