Economists with the National Association for Business Economics (NABE) expect for real GDP to grow 1.8 percent in 2012, down from 2.4 percent predicted in May and 1.9 percent in October. Housing, business investment, and export growth were the brighter spots observed in the forecast, with residential investment predicted to grow 12.0 percent next year.
Exports, which are expected to increase 3.3 percent in 2012, should grow 4.1 percent in 2013. Meanwhile, consumer spending should rise 2.0 percent next year, continuing to grow more slowly.
Despite the modest growth expected for 2013, the panelists responding to this survey anticipate slower growth for industrial production. The current forecast is for industrial production to rise 2.6 percent in 2013, down from the current estimate of 3.7 percent growth in 2012. This pullback is most likely a reaction of the weaknesses that we have seen in the manufacturing sector since July, with slow sales growth and uncertainties about the fiscal cliff having a large impact on production and employment.
The the NAM/IndustryWeek Survey of Manufacturers has both hiring and capital spending turning negative on average over the next six months. While this is more-negative than the forecast from NABE, it does help to explain the slower pace.
In terms of employment, the business economists surveyed do not anticipate much change next year. They expect for nonfarm payrolls to grow 156,000 on average each month in 2012, with that pace picking up just marginally to 165,000 per month in 2013. The average annual unemployment rate is forecasted to be 7.7 percent.
Pricing pressures, which have eased significantly over the course of this year, should continue to remain in-check. The consumer price index should rise 2.1 percent in 2013, the same pace as in 2012. Reduced energy costs help to explain part of the deceleration for both this year and next. The price of oil, which was estimated to be $99.60 per barrel in the October survey, is now expected to average $93.20 per barrel in 2013.
For the most part, the NABE outlook mirrors those of other economists, including the Federal Reserve. I continue to expect real GDP to grow around 2 percent next year (assuming we are able to avert the fiscal cliff), with industrial production up 1.7 percent.
Chad Moutray is chief economist, National Association of Manufacturers.