20 May 2013 22:35 [Source: ICIS news]
WASHINGTON (ICIS)--US business economists are increasingly optimistic about the nation’s economic recovery, a key survey said on Monday, with expectations for 2.4% growth in GDP this year and near-normal economic expansion of 3% in 2014.
Economists consider “normal” gross domestic product (GDP) growth for the US to be in the 3% to 3.5% range annually. Between 1947 and 2012, US annual GDP growth averaged 3.25%.
However, in its monthly survey, the National Association for Business Economics (NABE) cautioned that “an even stronger decline in government spending this year relative to last year … could negatively impact GDP growth”.
The survey said that business economists expect government spending at all levels to fall by 2.3% this year but then moderate to a 0.9% decline in 2014.
Offsetting that anticipated 2013 decline in government spending, NABE said that surveyed economists “hold a rosier view for 2013 and 2014 on residential investment and housing starts”.
The economists also are more upbeat now than just months ago about the pace of consumer spending, forecasting a 2.3% growth in personal consumption expenditures this year and a 2.6% expansion in 2014.
That is significant because consumer spending is the principal driving force of the US economy, accounting for as much as 70% of all commerce and production.
Those growth forecasts would be a marked improvement over the 1.9% gain in consumer spending seen in 2012.
The NABE survey suggests that US unemployment, now at 7.5%, will edge down to 7.4% by the end of this year and then slip further to 6.8% by the fourth quarter of 2014.
The business economists also believe that the Federal Reserve Board - the US central bank - will keep its record low federal funds interest rate of 0%-0.25% throughout this year and 2014.
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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