June 20, 2014: Economists Expect 2.5 Percent GDP Growth in 2014
Consumer Spending Is Projected to Increase, and the Labor Market to Improve
WASHINGTON — The National Association for Business Economics (NABE) announced that its June 2014 Outlook Survey panelists expect stronger economic growth for the balance of this year than they did three months ago. According to NABE President Jack Kleinhenz, chief economist of the National Retail Federation, “The consensus forecast is that real GDP [gross domestic product] will advance at a strong 3.5 percent annualized clip in the second quarter of 2014, bolstered by activity that was postponed due to adverse weather conditions earlier in the year. The March survey called for a 2.8 percent second-quarter gain. Growth expectations for the third and fourth quarters of 2014, at 3.1 percent and 3.2 percent, respectively, have also been revised upward.
“The latest forecast for annual real GDP growth this year is lower than the previous survey, though, due to a contraction in the first quarter. On an annual average basis, real GDP growth is seen increasing from 1.9 percent in 2013 to 2.5 percent in 2014, down from March’s expectation of 2.8 percent. The panel’s forecast of a further acceleration to 3.1 percent real GDP growth in 2015 is unchanged from March. Expectations for business investment, housing construction, exports, and government outlays have been tempered. In contrast, consumer spending is projected to increase — and the labor market to improve — both more quickly than previously forecast. Moreover, inflationary expectations remain low.”
“The majority view is that the Federal Reserve will terminate its long-term asset purchase program by the end of 2014 and begin to raise the federal funds rate in 2015,” according to NABE Outlook Survey Chair Timothy Gill, deputy chief economist of the National Electrical Manufacturers Association (NEMA). “Nonetheless, interest rates are expected to rise only modestly in the near term. The panel’s median forecast puts the federal funds rate at only 0.75 percent and the 10- year Treasury yield at only 3.75 percent by the end of 2015.”
For more information, visit www.nabe.com.
Publication date: 6/16/2014