Business Economists Cut U.S. Recession Odds as Growth Picks Up
The U.S. economy will grow more than previously estimated through 2012, with little chance of another recession, led by gains in business investment and commercial construction, a survey showed.
Gross domestic product will expand 1.8 percent this year, more than a September forecast of 1.7 percent, according to results of a survey by the National Association for Business Economics issued today in Washington. The world’s largest economy will grow 2.4 percent in 2012 and consumer spending will increase by 2.1 percent.
About 30 percent of respondents said the recovery will continue at a “moderate pace” with unemployment falling “only gradually,” the report said. The share predicting another economic slump dropped to 7.4 percent from 13 percent in the last survey in September.
“Despite a relatively subdued outlook, the panel estimates that the odds of a second recession remain low,” Shawn DuBravac, chief economist at the Consumer Electronics Association and the chairman of the survey, said in a statement. “Business spending remains a strong positive and housing starts are expected to continue to rise from the bottom seen in 2010. The panel remains concerned about debt-related issues in Europe.”
Payrolls will increase by 100,000 workers a month on average during the fourth quarter of this year, and improve to gains of 130,000 by the end of next year, according to the group’s estimates. The jobless rate will fall to 8.7 percent by the end of 2012. NABE economists identified “excessive unemployment” as their single greatest concern.
Spending on nonresidential structures will grow 4.6 percent this year, compared with a 1 percent estimate in the prior survey. For 2012, commercial construction outlays will rise 4.5 percent, compared with a prior 3 percent estimate.
Purchases of equipment and software will remain a bright spot in the recovery, the group said. Spending will grow 11 percent this year and 8 percent next year, compared with prior forecasts of 9.2 percent for this year and 7.7 percent.
Twenty-nine percent of respondents, little changed from in September, said the recovery will be “subpar,” impeded by high debt levels, loss of wealth and financial-market headwinds.
Home construction will fall 1.7 percent this year and grow 4.3 percent next year, down from a prior estimate of 5.8 percent.
Home prices, as measured by the Federal Housing Finance Agency’s index, will decline 2.5 percent in the fourth quarter from the same three months last year. Next year they are projected to increase 0.9 percent.
Forty-nine NABE members responded to the survey, conducted Oct. 20 to Nov. 2. The National Association for Business Economics, founded in 1959, is the professional organization for people who use economics in their work.
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