Economists believe U.S. economic growth to reach 3 percent by the end of 2013, according to National Association of Business Economics survey results released today. The panel of 44 professional economic forecasters from companies such as Dupont, Ford and JPMorgan Chase—surveyed Sept. 14-26—see economic output remaining slow through the end of the year, at just 1.9 percent, then slowly rising throughout 2013—a drop from NABE’s May survey which predicted growth to reach 3.1 percent by the end of 2013.
The survey also forecasts the housing market to continue to improve, however economists predict the overall economic growth will be too slow to provide much stimulus to the stagnant unemployment rate.
The NABE economists speculate the slow economic growth will lead to only about 132,000 jobs generated per month for the remainder of 2012, and the unemployment rate will climb back to 8.1 percent by the end of the year after falling to 7.8 percent last month—ending a 43-month streak of 8 percent or higher. In 2013, they expect an average of 155,000 new non-farming jobs per month, which will bring the unemployment rate back to 7.8 percent by the fourth quarter.
Survey respondents were more optimistic in the area of housing. After predicting 720,000 housing starts in May, their recent forecast increased to 750,000, which matched the August figures released last month by the Commerce Department. Likewise, the survey projects housing starts will jump to 850,000 in 2013. Home prices are also expected to rise by 1.5 percent through the end of this year and an additional 2.8 percent in 2013.
“After increasing their 2012 employment expectation in the May survey, respondents lowered anticipated average monthly job changes, leading to a slight rise in the unemployment rate to 8.1 percent by the fourth quarter of 2012, but their quarterly forecast figures suggest a pattern of slow but steady employment growth,” said Outlook Survey Chair Shawn DuBravec, chief economist at the Consumer Electronics Association. “
In an upward revision from the May forecast, the panelists expect housing starts will reach 750,000 units in 2012, and the forecast for 2013 shows continued improvement, with home prices projected to rise between now and the end of next year. The panelists’ projections for the ‘fiscal cliff’ are very diverse, though survey respondents in general do not expect the potentially large negative outcomes of the ‘fiscal cliff’ to materialize.”
In fact, economists do not expect the fiscal cliff to ever come to fruition, the survey found. They anticipate the deficit to fall below $1 trillion in 2013, and although predictions vary, they forecast a median deficit of $950 million. Treasury figures substantiate the estimates. On Oct. 12 it reported that although the federal budget had exceeded $1 trillion for the fourth-straight year, it had fallen from a $1.297 trillion deficit one year ago to $1.089 trillion.
The NABE economists widely disagreed on the future of the Bush tax cuts which are scheduled to expire at the end of the year. Fifty-five percent of the panelists believe the lower tax rates set in place by former President George W. Bush will be extended for an additional year for all income levels. About one third of the economists, however, felt the tax breaks would only be extended for lower-income brackets. Nearly two-thirds of those surveyed said they think the Social Security payroll tax cut will expire.