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Business Economists See More Slow Growth in 2013
WASHINGTON – The economists who responded to a survey by the National Association of Business Economists expect “tepid growth” the remainder of this year and through 2013 but for the economy to reach a 3% pace by the fourth quarter of next year.
“The outlook is for tepid, albeit improving economic growth,” NABE said, with real GDP (gross domestic product) growth to rise just 1.9% by year-end and 2.4% in 2013. GDP growth should accelerate each quarter.
The chairman of the outlook survey, Shawn DeBravac, chief economist of the Consumer Electronics Association, released the NABE results today. NABE foresees slow but steady growth in employment and a slight rise in the unemployment rate by yearend to 8.1%.
The survey was conducted Sept. 14 to 16, well before the Bureau of Labor Statistics released its numbers Oct. 5 when the official unemployment rate fell to 7.8%.
NABE has 2,400 members in 33 chapters across the United States.
The consensus of those surveyed suggest the depression in the housing construction industry has hit bottom and begun to rebound with a projected 750,000 housing starts by Dec. 31, 23% ahead of last year, and to grow an additional 13% in 2013.
Other projections:
- Core inflation will remain “quiescent,” holding at 1.9% 2013, although the Consumer Price Index will rise to 2.2% because commodity prices will rise. The price of a barrel of crude oil, for example, should rise 3.8%.
- While employment will increase, growth will not be as strong as this year. Monthly job growth in nonfarm employment in 2013 will average 155,000 jobs. The unemployment rate, the NABE economists projected, will be 7.8% a year hence.
- Consumer spending, 70% of the economy, will remain weak, dropping to 1.9% this year and rising by only 2% in 2013. Nominal retail sales will be slower the last quarter of this year than the same quarter a year ago
- Sales of light vehicles should “remain largely intact,” with 14.2 million sold this year and 14.8 million next year.
- Investment spending picked up this year, NABE says, and enjoyed “a robust 10.5% in October,” but the economists lowered their forecast to 4.3% for 2013.
- Labor productivity outside of agriculture should have increased 1.2% by year-end, a brighter view than the survey taken in May, but below the 1.3% projected in 2013.
- Expectations for corporate profits this year and next are “subdued” and lower than the yearly averages recorded over the last 20 years.
- Equity markets should be “flat” the remainder of this year but rise modestly in 2013.
Published by The Business Journal, Youngstown, Ohio.