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Economy in Brief

NABE Lowers Expectations for Economic Growth
by Tom Moeller   October 11, 2010

In the latest report, the National Association for Business Economics indicated that moderate U.S. economic growth will continue through next year. However, expectations for 2.6% growth are down from the previous forecast of 3.2%. Continuing to underpin the expansion is moderate growth in consumer spending. Contrasting forces on the investment front will supplant that recovery as housing improves just moderately but business spending on plant & equipment remains strong.

Housing starts and light motor vehicle sales both are expected to advance next year but will remain well below their pre-recession peaks. Notably, the accompanying gains in payroll employment are expected to be insufficient to lower the unemployment rate much below current levels. The moderate nature of the recovery is expected to exert just modest upward pressure on consumer prices and interest rates.

Improved economic growth is projected to generate positive growth in corporate profitability but the rate of advance in 2011 will slow by two-thirds from this year. Moderate growth also is expected to do little to reduce the federal government budget deficit; still at $1.2 trillion next year.

The figures from the latest NABE report can be found in Haver's SURVEYS database.

National Association For Business Economics 2011 2010 2009 2008 2007
Real GDP(% Chg. SAAR) 2.6 2.6 -2.6 0.0 2.0
  Personal Consumption Expenditures 2.3 1.5 -1.2 -0.3 2.4
  Nonresidential Structures 2.3 1.5 -1.2 -0.3 2.4
  Producers' Durable Equipment & Software 10.3 14.6 -15.3 -2.4 3.7
  Residential Investment 7.5 -0.6 -22.9 -24.0 -18.7
  Change in Real Business Inventories (Bil. $) 49.9 58.0 -113.1 -37.6 27.7
  Real Net Exports (Bil. $) -439.7 -416.6 -363.0 -504.1 -654.9
Housing Starts (Mil. Units) 0.75 0.60 0.55 0.91 1.36
Light Vehicle Sales (Mil. Units) 12.8 11.4 10.4 13.2 16.1
Payroll Employment Avg. Mthly. Change (000s) 153 94 -395 -302 90
Unemployment Rate (%) 9.3 9.7 9.3 5.8 4.6
Consumer Price Index (Y/Y %) 1.5 1.6 -0.4 3.9 2.9
Fed Funds Rate (%) 0.50 0.13 0.13 0.13 4.25
10-Year Treasury Note (%, Year End) 3.75 2.93 3.85 2.25 4.04
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