Moody’s Analytics US Macro Outlook: Restarting the Engines

  Moody’s Analytics US Macro Outlook: Restarting the Engines

Business Wire

NEW YORK -- February 7, 2013

Moody’s Analytics, a leading independent provider of economic forecasting,
today released Chief Economist Mark Zandi’s US economic outlook for February.
According to “U.S. Macro Outlook: Restarting the Engines,” fiscal austerity
will continue to drag on US growth in the coming months, but monetary stimulus
will ensure real US GDP growth of almost 2% through mid-2013, the average pace
of growth since the recovery began.

According to the report, as the weight from fiscal austerity lifts later in
the year, growth will rise to close to 3% during the second half and stay near
4% in 2014-15. Stronger growth will lead to a healthier job market and
eventually a jobless rate below 6% by 2016.

“Despite recent preliminary GDP data, which shows a fall-off in growth, the US
economy continues to grow at a modest pace,” Zandi said. “This resilience is
comforting given the mounting weight on growth from fiscal austerity.”

The report notes that the most encouraging sign is the job market, which is
averaging close to 175,000 net new jobs per month, with only the government
shedding positions. Even long-struggling construction is adding jobs at a
growing pace as the housing market rebounds.

Moody’s Analytics outlook also takes into account the effects of sequestration
– the $1.1 trillion in across-the-board, 10-year spending cuts set to take
effect March 1. If the full sequester takes effect as ordered under current
law, Moody’s Analytics estimates the hit to real GDP this year will be about
0.5 percentage point. Zandi also estimates tax hikes from the fiscal cliff
deal will shave 0.8 percentage point from GDP growth in 2013: 0.6 percentage
point from the expiration of the payroll tax holiday, and the rest from higher
tax rates on higher-income households.

The report concludes that barring an external shock, the economy should be
able to hold its own until the weight begins to lift later this year.

For more information, visit Moody’s Analytics Dismal Scientist.

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Contact:

Moody’s Analytics
Jessica Schaefer, 212.553.4494
Communications Strategist
jessica.schaefer@moodys.com