Business Economists More Optimistic about Growth
WASHINGTON -- The National Association for Business Economics is more optimistic about the growth of the economy the remainder of 2014 than it was in March. The association foresees 3.1% growth next quarter and 3.2% growth the last quarter.
In the latest NABE outlook, released today, 47 professional economists “expect stronger economic growth for the balance of this year than they did three months ago,” said Jack Kleinheinz, president of the association and chief economist of the National Retail Federation.
The survey was conducted between May 8 and 21.
The consensus among the 47 business economists is that the economy is growing “at a strong 3.5% annualized clip” this quarter in part because of the prolonged winter weather that was harsher than usual. Construction of new houses was especially hard hit but is rebounding.
Revised government data shows the economy contracted 1% in the first quarter, a result unexpected because of the winter weather. Three months ago, the NABE panel projected this quarter would see 2.8% growth.
The panel foresees interest rates rising but “only modestly in the near term,” only 0.75%.
Other highlights from the panel’s outlook:
- Nonfarm payrolls should have posted an average monthly gain of 209,000 when the year ends and the pace of job creation next year should average 215,000 per month. Pay increases should average 2% this year and be on pace to achieve 2.5% in 2015.
- The Federal Open Markets Committee of the Federal Reserve System will raise interest rates in 2015, just more than half of the panels predicted while a third expect the Fed will do so later this year. Seven percent predict the Fed won’t raise rates until 2016, if not later.
- The panel’s expectations of inflation remain basically unchanged from March. The gross domestic product price index, the broadest inflation barometer, should register 1.6% for the year. 2013 saw a rate of 1.4% and the outlook for 2015 is 1.8%. The Consumer Price Index is projected to be 1.6% higher than 2013, which was 1.2% higher than 2012.
- Sales of new cars and trucks this year will be 16.1 million and 16.5 million next year as consumer spending rises. Where last December the panel foresaw consumer spending running at 2.4% this year and in the March survey at 2.6%, the most recent survey sees consumer spending on a 2.9% clip.
- The federal deficit is now seen to run $520 for fiscal 2014 (ends Sept. 30), down from $557 billion in March, and to run $475 billion in fiscal 2015. Real government spending will continue to contract 0.7% this fiscal year but increase 0.5% next year.
- Nonfarm productivity will rise a modest 1.2% this year, more than twice the 0.5% rate in 2013.
- The price of petroleum will rise slightly, to $100 a barrel this year compared to $99.75 last year and the panel sees the price of a barrel of petroleum falling back to $99 in 2015.
Published by The Business Journal, Youngstown, Ohio.
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