Tags: OSullivan | GDP | growth | economy

Economist O'Sullivan: GDP Will Gain 3.3 Percent This Year

By    |   Wednesday, 12 February 2014 11:17 AM

Jim O'Sullivan, chief U.S. economist for High Frequency Economics, expects GDP growth to continue accelerating this year — to a 3.3 percent rate, up from 2.7 percent in 2013.

He's the most accurate forecaster in MarketWatch's survey of economists during the past 10 years.

O'Sullivan has the highest forecast in the monthly Blue Chip Economic Survey, though he's not far above the 2.9 percent median, MarketWatch reports.

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Some economists have lowered their forecasts after several weak pieces of data, such as employment reports. But, "I don't see where it [a slowdown] is coming from," O'Sullivan tells MarketWatch.

The biggest boost to the economy relative to 2013 will be a reduction of fiscal drag. Last year's tax increases and spending cuts sliced 1.5 percentage points from growth, he estimates.

The fiscal drag this year will shrink to 0.5 percentage point, O'Sullivan predicts. Inventory and home building may provide less growth than they did last year, but he sees consumer spending increasing enough to make up for that shortfall.

Personal consumption could rise almost 3 percent this year, compared with 2.3 percent growth last year, without a major decline in the savings rate, he notes.

"There's no case for a sudden slamming on the brakes."

Others are less sanguine about the economy. "What [investors] are more worried about is could there be a recession?" Adam Parker, Morgan Stanley's chief equity strategist, tells CNBC. "Could the earnings collapse?"

He made his comments Friday, after the government reported that non-farm payrolls rose only 113,000 in January and 75,000 in December.

Editor’s Note: 38 Trades That Could Turn $1,000 Into $49,000

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Jim O'Sullivan, chief U.S. economist for High Frequency Economics, expects GDP growth to continue accelerating this year — to a 3.3 percent rate, up from 2.7 percent in 2013.
OSullivan,GDP,growth,economy
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2014-17-12
Wednesday, 12 February 2014 11:17 AM
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