Survey: U.S. Economic Growth to Pick Up, Hiring Steady

Economy GDP
Patrick Semansky/APAn employee works on a truck engine assembly line at Volvo Trucks' powertrain manufacturing facility in Hagerstown, Md.
By CHRISTOPHER S. RUGABER

WASHINGTON -- U.S. economic growth should accelerate in the second quarter and remain healthy for the rest of this year, according to a forecast by a group of U.S. business economists. Still, growth for the full year will likely come in lower than they previously estimated.

Job growth should remain steady and consumer spending will also likely pick up, a survey by the National Association of Business Economists said Monday. The survey of 47 economists from companies, trade associations and academia was conducted from May 8 to May 21.

The survey also found that economists increasingly agree that the Federal Reserve will end its bond purchase program by the end of this year.

That's partly because economists are optimistic about growth for the rest of this year: They expect it will jump to 3.5 percent in the second quarter and remain above 3 percent for the rest of the year.

But the pickup comes after harsh winter weather caused the nation's gross domestic product to contract 1 percent in the first three months of the year, much worse than analysts had expected. GDP is the broadest measure of an economy's output.

That weak first quarter reading has caused many economists to lower their expectations for 2014 as a whole. The NABE survey found that economists now project growth will be just 2.5 percent this year, down from a forecast of 2.8 percent in March.

The new forecast is still slightly above the annual average growth rate of about 2.2 percent since the recession ended in June 2009 and up from 1.9 percent in 2013. But stronger growth is needed to accelerate hiring and boost wage growth, which has been weak by historical standards.

The NABE's survey is slightly more pessimistic than the Federal Reserve's most recent projections, released in March. The Fed expects growth will be between 2.8 percent and 3 percent this year. The Fed may lower its growth outlook for this year when it releases its next forecasts later this month because of the first quarter's contraction.

Economists are nearing a consensus about the timing of the Federal Reserve's next moves. Nearly three-quarters expect the Fed will end its bond purchase program in the final three months of this year, the NABE survey found. That's up from the 57 percent who said so three months ago.

The Fed is purchasing Treasury securities and mortgage-backed bonds in an effort to lower long-term interest rates to encourage more borrowing and spending. It has been steadily paring back the program, from $85 billion a month last year to $45 billion in May.

In addition, 86 percent of economists forecast that the Fed will raise the benchmark short-term interest rate it controls for the first time in 2015. In March, just 53 percent said 2015, while one-third said this year and 15 percent said a rate hike wouldn't occur until 2016.

The NABE survey found that the economists are more optimistic about hiring. They project that employers will add 209,000 jobs a month this year. That's up from their March forecast of 188,000.

So far this year, hiring has been a little bit better: it has averaged 214,000 a month from January through May.

More jobs means more people earning paychecks, and that can boost spending. Economists are more optimistic about consumer spending this year, which they estimate will grow at a 2.9 percent pace. That would be the highest level since 2006.


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createidea

WASHINGTON -- U.S. economic growth should accelerate in the second quarter and remain healthy for the rest of this year, according to a forecast by a group of U.S. business economists...

LOL !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Yeah, right.

June 10 2014 at 12:54 PM Report abuse +2 rate up rate down Reply
arcpac

Oh no...the suddenly booming (maybe) 2.5% growth will sweep away 5.5 years of abject failure and Hairy Reed and his Merry Band of socialist hacks will ride the tidal wave of optimism to victory...us tea party folks are dooooomed...nyuk yuk yuk yuk...NOT...have some more of that koolaid teabuster2 I detect a few fading shreds of reality are still present :-)

June 09 2014 at 3:32 PM Report abuse -3 rate up rate down Reply
1 reply to arcpac's comment
teabuster2

Sounds like you over dosed on the right wing toxic tea.

June 09 2014 at 4:04 PM Report abuse +3 rate up rate down Reply
teabuster2

An improving economy will increase the outlook for the Democrats this November.

June 09 2014 at 1:27 PM Report abuse +1 rate up rate down Reply
1 reply to teabuster2's comment
dopey.obamite

Man you have low standards.

June 09 2014 at 10:06 PM Report abuse -1 rate up rate down Reply
Valerie

Q: How many economists does it take to change a light bulb??

A: Ten. One to actually switch out the light bulb. Three more to sing the praises of so many more low paying jobs being created in retail. fast food, and other low paying service fields. Five more to regularly make guest appearances on CNBC to lie about "improvement in the economy". And one more, who will write an article about "new opportunities in career openings in the light bulb changing profession".

June 09 2014 at 11:00 AM Report abuse +2 rate up rate down Reply
rgkarasiewicz

That must explain why 20% of American families are jobless.

June 09 2014 at 10:33 AM Report abuse rate up rate down Reply