09 September 2013 17:53 [Source: ICIS news]
WASHINGTON (ICIS)--The US economy likely will grow at a modest 1.9% this year but then ramp up to normal gross domestic product (GDP) expansion of 3% in 2014, leading business economists said on Monday, with next year’s growth driven chiefly by improving consumer spending, housing starts and employment.
However, in its latest economic outlook, the National Association for Business Economics (NABE) noted that its forecast for 1.9% GDP growth this year is lower than the group’s May estimate of 2.4% expansion for 2013.
But the outlook for the nation’s economy in 2014 remains more bullish, with NABE’s forecast for 2.8% annualised GDP growth in the first quarter next year and annualised GDP expansion of 3% in each of the other three quarters of the year.
Excluding intermittent recessions, for much of the nearly seven decades since the end of World War II the US economy has grown at an annual pace of 3% to 3.5%, a range that has long been considered “normal trend” for the nation.
The return to normal or near-normal economic growth in 2014 will be driven in part by increased US consumer spending, the outlook said, although what economists call “personal consumption expenditures” likely will be lower this year than earlier believed.
NABE said it has revised downward its outlook for consumer spending growth this year to 2% from its May forecast of 2.3%, citing reduced expectations for industrial production.
But consumer spending - which accounts for as much as 70% of all US commercial activity and production - will pick up to 2.6% growth in the new year, the outlook said.
Also contributing to better GDP growth in 2014 will be steady gains in the US housing sector, NABE said.
The group’s member economists expect housing starts this year to expand to 950,000 units, up from the 780,000 new homes built in 2012.
The pace of residential construction will accelerate in 2014, the outlook said, climbing to 1.16m units for the full year.
Improvements in consumer spending and new housing, along with other sector gains, will help drive more employment next year, according to the NABE forecast.
From a full-year unemployment rate for this year at 7.5%, the NABE survey economists said they expect the jobless rate will fall to 7% overall in 2014, including a dip to 6.8% in the final quarter of next year.
As more jobs are generated, consumer spending and home-buying increase, creating still more worker demand.
However, NABE cautioned that the US Federal Reserve Board is expected to begin easing its stimulative policies in the near term, effectively increasing interest rates late this year or early in 2014.
The knock-on effect likely will raise rates for mortgage loans, consumer debt and business investment funding, levelling what otherwise might be a self-sustaining expansion.
NABE’s outlook for the US economy for this year and next is more or less in keeping with other recent forecasts by the US manufacturing sector.
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
Asian Chemical Connections