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Economy in Brief

Business Economists Projections Are Little-Changed
by Tom Moeller  December 17, 2012

The National Association for Business Economics held the expectation for real GDP growth next year at 2.1%, the same as in October's survey. However, these are lowered figures versus 2.7% in the May tally. That follows an unrevised projection for 2.2% growth for this year. Quarterly growth still is expected to improve to 3.0% by the end of next year. Consumer spending still is seen rising 2.0% in 2013, but not 2.5% as projected in May. Growth in producers' durable equipment was lowered slightly to 5.0% and remained down from double-digits early in the recovery.

Expectations for  housing starts in 2013 were raised slightly to 930,000, after 770,000 for this year. Expected light vehicle sales still show improvement to 14.8M. Forecasted average monthly gains in payroll employment were nudged up to 165,000. The unemployment rate is expected to average 7.7% for all of next year, a slight downward revision. The forecast for consumer price inflation was nudged down to 2.1%. Expectations for growth in prices less food & energy were lowered slightly to 1.7% for this year and 1.8% for next.

Recent improvement in the bond market is expected to end with continued economic growth. The forecasted 2.25% interest rate on 10-year Treasury notes at the end of next year was roughly unchanged from the last forecast. Short-term rates should remain stable. The forecast for 5.0% corporate profit growth in 2013 was unchanged after an upwardly revised 8.5% for this year. However, these rates remain well below the 23.2% gain in 2010 and 11.4% growth in 2009 when the recovery first got going. Moderate economic growth is forecast to reduce the federal government budget deficit to $900 billion in 2013, a bit lower than expected earlier and well down 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 2013 2012 2011 2010 2009
Real GDP (% Chg. SAAR) 2.1 2.2 1.8 2.4 -3.1
  Personal Consumption Expenditures 2.0 1.9 2.5 1.8 -1.9
  Nonresidential Structures 3.1 9.2 2.7 -15.6 -21.1
  Producers' Durable Equipment & Software 5.0 6.6 11.0 8.9 -16.4
  Residential Investment 12.0 12.0 -1.4 -3.7 -22.4
  Change in Real Business Inventories (Bil. $) 40.0 41.2 31.0 50.9 -139.0
  Real Net Exports (Bil. $) -417.0 -412.8 -408.0 -419.7 -355.2
Housing Starts (Mil. Units) 0.93 0.77 0.61 0.59 0.55
Light Vehicle Sales (Mil. Units) 14.8 14.3 12.7 11.6 10.4
Payroll Employment Avg. Monthly Change (000s) 165 156 153 86 -422
Unemployment Rate (%) 7.7 8.1 9.0 9.6 9.3
Consumer Price Index (Y/Y %) 2.1 2.1 3.1 1.6 -0.3
Fed Funds Rate (%, Year End) 0.125 0.125 0.125 0.125 0.125
10-Year Treasury Note (%, Year End) 2.25 1.70 1.89 3.30 3.85
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