Roundup: U.S. GDP forecast lifted without good news on jobs
WASHINGTON, Feb. 28 (Xinhua) -- Even as the projected growth of U.S. Gross domestic product (GDP) for 2011 has been lifted to 3.3 percent from previous estimate of 2.6 percent, the job situation is not expected to improve much, according to new projections by the National Association for Business Economists (NABE).
The jobless rate will remain high, although it will slide somewhat as the economy recovers from the worst recession in eight decades, the NABE said in a report released on Monday.
The February 2011 NABE Outlook presents the consensus of macroeconomic forecasts from a panel of 47 professional forecasters.
The panel expects growth in 2012 to inch up to 3.4 percent, slightly higher than most estimates of the economy's long-run growth potential.
The extension of the Bush tax cuts in December is expected to contribute 0.5 percentage points to growth in 2011 and 0.1 percentage points in 2012, the report said.
THE JOB MARKET
The poll also found that conditions in the job market are likely to improve modestly, forecasting monthly payroll gains to an average of 178,300 this year. Still, they are expected to rise throughout the year, reaching 210,000 jobs per month in this year's fourth quarter.
Next year will see employment inch higher, rising to 215,500 jobs added per month, the survey found. Nevertheless, the panel expects unemployment to remain high, with the jobless rate averaging 9.3 percent in this year's first quarter and edging down to 9 percent in the fourth quarter.
Jobless numbers are then expected to drop off to 8.2 percent in the final quarter of 2012, a level that is still high.
Consumer spending is also expected to rise 3.2 percent this year, up from 2.4 percent in the previous survey. Next year, it is projected to grow 2.9 percent, matching the 2.9 percent annual rate of consumer spending growth over the past 20 years, the survey found.
This solid pace of spending will spark follow-on effects: It will allow vehicle sales to improve, as 13 million light vehicle sales are expected this year and 14 million in 2012. "Pent-up consumer demand will be a key factor supporting economic growth over the next two years," the report found.
HOUSING SECTOR TO REMAIN SLUGGISH
One downside, however, is that recovery in the housing sector will be sluggish. While housing starts will advance in 2011, panelists pared back their expectations- from 720,000 in the November survey to 660,000 in the current survey. In 2012, housing starts are expected to rise to a more robust 850,000 units.
Nevertheless, home prices are expected to increase 2.4 percent in 2012. Overall, most panelists forecast that home prices will be "bumping along at a cyclical low," although 21 percent of survey respondents believe prices were still trending downward and 19 percent feel that prices have begun to trend upward, the survey found.
CONFIDENCE GROWING
Data also reflects greater confidence that financial headwinds will gradually begin to subside, the study found. Nearly 40 percent of respondents believe the recovery will continue at a moderate pace. One third voiced optimism, contending that the economy will "overcome its headwinds and behave more in line with a traditional business-cycle expansion," the poll found.
Eleven percent of respondents characterize the expansion as "subpar with severe wealth losses and onerous debt burdens inhibiting spending and lending," down from the 40 percent of panelists who held the same view in November, the study found.
The likelihood of either stagflation--inflation amid a stagnant economy-- or a double dip recession continues to be relatively low, although 10 percent of respondents think that the recovery will be uneven and depend on stimulus policies.
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