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Economy in Brief

NABE Forecast Shows Improved GDP Growth
by Tom Moeller  May 20, 2013

The National Association for Business Economics raised the median expectation for real GDP growth to 2.9% for next year from the 2.8% estimate in its November survey. That follows a 2.1% growth projection for this year. Quarterly growth is expected to improve to 3.0% by Q2'14 and remain at that pace through year-end. Personal consumption expenditures growth is forecast to improve to a still-moderate 2.6% next year. That would, nevertheless, be its fastest growth rate since 2006. Growth in residential investment should continue to be the economy's strongest sector with a second year of 15.0% growth. Business investment growth should follow as producers durable equipment gains 6.8% and spending on structures increases 5.2%. Inventory investment and real net exports should remain roughly stable at current levels.

Expectations call for an upwardly-revised 1.18M housing starts in 2014 after 1.00M during this year. Expected light vehicle sales show further improvement to 15.9M after a raised 2013 expectation of 15.4M. Forecasted average monthly gains in payroll employment this year of 198,000 were improved slightly from the last forecast and up from the 168,000 rise projected for this year. The unemployment rate is expected to average 7.1% for all of next year, a slight downward revision. The forecast for consumer price inflation remains low at 2.0% versus a downwardly revised 1.8% projection for 2013. Expectations for the core PCE price index are for a 1.8% advance in 2014 after a 1.5% rise this year and last.

Recent improvement in the bond market is expected to end with continued economic growth. The forecasted 2.81% interest rate on 10-year Treasury notes at the end of next year was raised slightly from six months ago but the Fed still is not expected to raise rates. The forecast for 7.5% corporate profit growth in 2014 is improved from a 5.3% rise this year. These growth rates remain well below the 23.2% gain in 2010, when the economic recovery first got going, and 16.1% growth in 2012. Moderate economic growth is forecast to reduce the Federal government budget deficit to $707 billion in 2014, half its $1.4 trillion peak in 2009.

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

Economic Prospects for the Long Run is the title of Saturday's speech by Fed Chairman Ben S. Bernanke and it can be found here.


National Association For Business Economics 2014 2013 2012 2011
Real GDP (% Chg. SAAR) 2.9 2.1 2.2 1.8
  Personal Consumption Expenditures 2.6 2.3 1.9 2.5
  Nonresidential Structures 5.2 4.6 10.8 2.7
  Producers' Durable Equipment & Software 6.8 5.3 6.9 11.0
  Residential Investment 15.0 15.0 12.1 -1.4
  Change in Real Business Inventories (Bil. $) 44.5 45.1 43.0 31.0
  Real Net Exports (Bil. $) -402.3 -405.9 -400.7 -408.0
Housing Starts (Mil. Units) 1.18 1.00 0.78 0.61
Light Vehicle Sales (Mil. Units) 15.9 15.4 14.4 12.7
Payroll Employment Avg. Monthly Change (000s) 198 168 183 175
Unemployment Rate (%) 7.1 7.6 8.1 8.9
Consumer Price Index (Y/Y %) 2.0 1.8 2.1 3.1
Fed Funds Rate (%, Year End) 0.125 0.125 0.125 0.125
10-Year Treasury Note (%, Year End) 2.81 2.20 1.78 1.89
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