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Economy in Brief

NABE Maintains Forecast of Improving Economic Growth
by Tom Moeller  December 8, 2014

The National Association for Business Economics continues to forecast improvement in U.S. real economic activity. Expectations were little-changed from September for 3.1% real GDP growth in 2015 and 2.2% for this year. Quarterly growth is expected to hold fairly steady at 3.0%. Expected personal consumption expenditures growth was roughly unchanged at a moderate 2.7%, its quickest growth rate since 2006. Growth in business investment in equipment & software is expected to remain firm at 4.3% while growth in spending on nonresidential structures may slip a bit to 5.5%. Residential investment should continue to be the economy's strongest sector with a lessened 7.0% increase forecast in 2015 after a 1.7% rise this year. The rate of inventory investment should diminish next year after remaining little-changed 2014 gain. Real net exports are expected to deteriorate slightly.

Forecasts for housing starts again were little-changed at 1.15 million in 2015 following 1.00 million this year while expectations for light vehicle sales were unchanged at 16.8 million after an expected 16.4 million in 2014. Forecasted average monthly gains in payroll employment were little-changed at 217,000 next year after 226,000 this year. The unemployment rate forecast average was lessened to 5.6% next year after 6.2% this year. The forecast for consumer price inflation was lowered to 1.7% for next year from 2.1% expected earlier.

The forecasted 3.20% interest rate on 10-year Treasury notes at the end of next year is lower than projected earlier and compares to a downwardly revised estimate of 2.50% at the end of this year. The Fed is expected to raise rates in the third quarter of 2015, pushed back from the earlier forecast of a Q2 increase. The forecasted 6.7% gain in corporate profits next year, following 4.7% growth this year, was little-changed. The Federal government budget deficit is expected to shrink to a lessened $460 billion in 2015, roughly one-third its $1.4 trillion peak in 2009.

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

National Association For Business Economics 2015 2014 2013 2012
Real GDP (% Chg. SAAR) 3.1 2.2 2.2 2.3
  Personal Consumption Expenditures 2.7 2.2 2.4 1.8
  Nonresidential Structures 5.5 7.9 -0.5 13.1
  Nonresidential Equipment & Software 4.3 3.9 4.6 6.8
  Residential Investment 7.0 1.7 11.9 13.3
  Change in Real Business Inventories (Bil. $) 57.8 62.0 63.5 57.0
  Real Net Exports (Bil. $) -438.0 -433.4 -420.4 -452.5
Housing Starts (Mil. Units) 1.15 1.00 0.92 0.78
Light Vehicle Sales (Mil. Units) 16.8 16.4 15.5 14.4
Payroll Employment Average Monthly Change (000s) 217 226 194 186
Unemployment Rate (%) 5.6 6.2 7.4 8.1
Consumer Price Index (Y/Y %) 1.7 1.7 1.5 2.1
Fed Funds Rate (%, Year End) 0.75 0.125 0.125 0.125
10-Year Treasury Note (%, Year End) 3.20 2.50 3.04 1.78
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