Economists with the National Association for Business Outlook expect for real GDP to grow 2.4 percent on average in 2012, with 2.8 percent growth expected next year. This is unchanged from the February survey and reflects an economy that is expanding modestly.
With that said, there were improvements in the forecasts for consumption, housing and vehicle sales. Manufacturing is also expected to fare better, with the median growth in industrial production up 4.1 percent in 2012. This is higher than the 3.5 percent increase anticipated in the previous survey.
In terms of employment, the panelists anticipate 188,000 additional nonfarm payroll jobs on average each month this year. This is slightly above the 170,000 gain predicted in the February survey, with business economists expecting the unemployment rate to fall to 8 percent in the fourth quarter of this year.
There were some areas that we were weaker. Business investment – particularly nonresidential structures and purchases of equipment and software – are expected to grow somewhat slower than what was previously predicted. In addition, the respondents anticipate a wider trade deficit and a slower growth rate for corporate profits.
For the most part, the NABE outlook mirrors those of other economists, including the Federal Reserve. I continue to expect real GDP to grow by 2.5 percent this year, with industrial production up 4 percent.
In other news, the Chicago Federal Reserve’s National Activity Index rose from a revised -0.44 in March to +0.11 in April. Higher industrial production was largely responsible for the positive swing, with activity up 1.1 percent in April, as reported last week. Other contributors to the gain include income and sales, orders, and inventories.
The three-month average for the National Activity Index now stands at -0.06. Numbers around zero suggest that the U.S. economy is growing at its historical trend, so this figure indicates that it is near that goal. More importantly, it indicates that the risk of recession is minimal.
Chad Moutray is chief economist, National Association of Manufacturers.
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