— Consumer spending is likely to pick up
this year, while government spending declines
at a faster rate, according to a survey of
economists predict that the U.S. economy will
grow 2.4 percent this year and 3 percent next
year. That's unchanged from their forecast in
they are more bullish on consumer spending and
housing than they were three months ago, in
part because of a more positive view about
survey was released Monday by the National
Association for Business Economics, which
periodically surveys economists for banks,
manufacturers and universities.
49 economists who were questioned between
April 16 and April 30 predicted that consumer
spending will rise 2.3 percent this year, up
from a forecast of 1.9 percent in February.
They were also more upbeat about auto sales,
predicting 15.4 million vehicles sales, an
increase of 1 million over 2012.
Hensel, chair of the NABE survey and a
business professor at National Defense
University, said consumer spending will get a
boost from gains in the stock market, home
values and lower unemployment.
prices are going up, and with also the
improvement in the unemployment rate, people
will be more willing to buy," Hensel said
in an interview.
economists predicted that home prices will
rise 4.4 percent this year and 4 percent next
year. Boosted by new construction, they
predict a 15 percent jump in residential
housing investment this year.
starts hit a 5-year peak in March then fell in
April, with most of the decline due to less
apartment construction, which can swing wildly
from month to month.
for building permits hit a 5-year high in
April, suggesting that the housing market will
continue to recover from the recession. A
recent survey by the National Association of
Home Builders found continued optimism among
NABE economists, who were surveyed before
April unemployment was reported at 7.5
percent, predicted that the rate will decline
to 7.4 percent in the fourth quarter and 6.8
percent in late 2014.
profits after taxes are expected to rise 5.3
percent in 2013 and 7.5 percent next year.
Both of those are more bullish forecasts than
the economists offered in February.
consumers might spend more, the government
sector is expected to shrink 2.3 percent this
year — sharper than the 1 percent cut that
the economists predicted in February, before a
series of automatic federal spending cuts
kicked in when Congress and the White House
failed to reach a deal to avoid them. The
economists expect government spending to
decline a more modest 0.9 percent in 2014, but
Hensel said the forecast could change to a
bigger decline if it looks like the automatic
cuts will continue into the next fiscal year.
government spending, especially by the
military, "has already had a sharp effect
on GDP growth," she said. GDP, or gross
domestic product, is the measure of the
economy's total output of goods and services.
NABE survey found little alarm about potential
inflation. The economists expect the Consumer
Price Index to rise 1.9 percent this year and
2.1 percent in 2014.
Friday, the Conference Board reported that its
index of leading economic indicators rose in
April after dipping in March. A board
economist said the economy was getting a lift
from steady job gains and the housing market,
offsetting government spending cuts.