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Economy in Brief

NABE Forecast For Moderate U.S. Growth Is Little-Revised
by Tom Moeller November 21, 2011

The National Association for Business Economics reported little change to its U.S. economic growth forecast. This follows sharp downward revision in its September numbers. For this year, real GDP growth should average 1.8%, versus 1.7% expected in September. For next year, growth is expected to remain moderate at 2.4%, revised little from 2.3% forecasted earlier. Expectations for growth in the economy's various sectors were essentially unchanged. Consumer spending now is forecast to rise roughly 2.1% this year and next while growth in business fixed investment should be comparatively strong. Residential investment is expected to fall 1.7% this year but rise a modest 4.3% in 2012.

Expectations for housing starts were revised lower to 0.66M for next year and expected light vehicle sales were unchanged at 13.3M. Lessened were expected gains in payroll employment to a low 127,000 per month in 2012. The unemployment rate is expected to remain high at 8.9% for all of next year. The forecast for consumer price inflation was little-revised at 3.2% this year and 2.2% for next. The bond market is expected to hold onto most of its recent rally with long-term interest rates at 2.70% at year-end 2012 versus a prior expectation of 3.40%. Crude oil prices should average $95 at yearend 2012 versus $92 at yearend 2011, the same as forecasted earlier.

Improved economic growth is projected to generate positive growth in corporate profitability. The forecasts for 7.0% growth during this year and 6.0% for 2012 were little-revised but remain well below the 19% 2010 increase. Moderate economic growth also is expected to reduce the federal government budget deficit to an unrevised $1.1 trillion in 2012 versus its $1.4 trillion 2009 peak.

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

National Association For Business Economics 2012 2011 2010 2009 2008
Real GDP (% Chg. SAAR) 2.4 1.8 3.0 -3.5 -0.3
  Personal Consumption Expenditures 2.1 2.2 2.0 -1.9 -0.6
  Nonresidential Structures 4.5 4.6 -15.8 -21.2 6.4
  Producers' Durable Equipment & Software 8.0 10.5 14.6 -16.0 -4.3
  Residential Investment 4.3 -1.7 -4.3 -22.2 -23.9
  Change in Real Business Inventories (Bil. $) 37.2 31.8 58.8 -144.9 -36.3
  Real Net Exports (Bil. $) -408.4 -415.4 -421.8 -358.8 -494.8
Housing Starts (Mil. Units) 0.66 0.60 0.59 0.55 0.91
Light Vehicle Sales (Mil. Units) 13.3 12.6 11.6 10.4 13.2
Payroll Employment Avg. Monthly Change (000s) 127 115 940 -5,063 -3,600
Unemployment Rate (%) 8.9 9.0 9.6 9.3 5.8
Consumer Price Index (Y/Y %) 2.2 3.2 1.6 -0.3 3.8
Fed Funds Rate (%, Year End) 0.125 0.125 0.125 0.125 0.125
10-Year Treasury Note (%, Year End) 2.70 2.20 3.30 3.85 2.25
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