Fiscal issues will hamper 2013-2014 growth in US GDP - NABE

25 February 2013 16:28  [Source: ICIS news]

Fiscal issues will hamper 2013-2014 growth in US GDP - NABEHOUSTON (ICIS)--The US GDP should grow by 2.4% in this year and by 3.0% in 2014, but the number would be higher if it was not for the fiscal uncertainty surrounding the federal government, according to a forecast released on Monday by the National Association for Business Economics (NABE).

The NABE February 2013 Outlook is the culmination of macroeconomic forecasts for this year and 2014 from a panel of 49 economists.

According to the report, 95% of the panelists think that US GDP is likely to be hurt by uncertainty surrounding the federal budget sequestration and the debt ceiling.

Almost 60% of the panelists think the sequester will occur in either partial or full form on 1 March, the day its set of budget cuts is to take place.

Still, the panel’s forecast for GDP growth of 2.4% in 2013 and 3.0% in 2014 would show acceleration of the economic recovery after the US posted a GDP of 1.5% in 2012.

The NABE Outlook predicts real personal consumption expenditures to grow by 1.9% in 2013 and 2.5% in 2014. Panelists also expect increases in residential investment, housing starts and home prices.

Growth in industrial production is forecast to slow from 3.7% in 2012 to 2.5% in 2013 and 3.5% in 2014.

Panelists think inflation will be flat and that the Consumer Price Index (CPI) will grow by 2.0 points in 2013 and 2.1 points in 2014.

The unemployment is expected to drop slowly, the NABE Outlook said, from the average of 8.1% in 2012 to an average of 7.7% in 2013 and 7.2% in 2014.

Panelists think that several of the European countries likely will need bailout packages, with more than a third of the economists surveyed for the NABE Outlook saying Spain will require a larger bailout package in 2013 than previously anticipated.

About a quarter of the panelists think Italy will require a bailout this year, while a fifth of the panelists said Ireland will require a second bailout this year.

By: Jeremy Pafford
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