A new survey shows economists are growing slightly more optimistic about recovery in the job and housing markets but expect other pillars of the economy to remain weak.
The National Association for Business Economists says in a report issued Monday that its forecasters expect modest growth for the remainder of the year, with the pace picking up in 2013.
Still, the 54 economists NABE surveyed expect consumer spending, business investment and gross domestic product to remain below historic norms.
The quarterly survey compiles expectations for indicators such as hiring, home construction and spending from economists at industry groups, government agencies, banks and consultancies.
The panel now expects average monthly job growth for 2012 of 188,000, up from its forecast in February for 170,000 new jobs per month in 2012. The improved outlook would lead the unemployment rate to fall to 8 percent by the end of the year, the economists said. The rate is now 8.1 percent. By the end of 2013, the unemployment rate is expected to ease further to 7.5 percent.
The NABE economists expect housing starts to rise 18 percent to 720,000 units this year and increase again to 850,000 in 2013. Residential investment is forecast to increase 8.8 percent this year; that's better than the 6.6 percent the economists predicted in February. In 2013, they now expect a 10.4 percent rise, up from 10 percent.
The outlook for light vehicle sales is also brighter, and the NABE panel now expects sales to reach 14.5 million units this year, up from their previous forecast for 14 million units. In 2013, they now expect 14.8 million light vehicles to sell, up from a forecast for 14.6 million.
On a broader level, however, the panel's forecast remains relatively bleak.
GDP, which reflects the economy's total output of goods and services, is predicted to grow just 2.4 percent this year, which is shy of the roughly 2.5 percent growth forecast by the Federal Reserve. For 2013, the panel of NABE economists expects the GDP to grow 2.8 percent.
Panelists also say consumer spending will grow 2.2 percent this year and 2.5 percent in 2013, below the historic average rate of 2.8 percent.
After-tax corporate profits are projected to rise 5 percent this year and 6.3 percent next year. The NABE economists earlier forecast 6.3 percent growth in 2012 and 7 percent in 2013. The annual average over the past 20 years is 10.2 percent.
NABE's panel now expects real spending on nonresidential structures to grow 2.9 percent, down from the 4.2 percent they forecast in February.
The panel revised its projection for industrial production upward to 4.1 percent in 2012. Panelists still expect labor productivity growth to pick up from last year's rate of 0.4 percent, rising to 1 percent in 2012 and to 1.4 percent in 2013.
And they expect a trade deficit of $562 billion this year, up from $535 billion. For 2013, they expect a deficit of $569 billion, up from $525 billion.
The economists expect the federal budget deficit, meanwhile, to hit nearly $1.2 trillion this year but to fall to $900 next year, with reductions in government spending. Combined federal, state and local government spending is expected to contract by 1.3 percent in 2012 and 0.4 percent in 2013.
The NABE surveyed its 54 panelists April 19 to May 2.
On Wednesday, the U.S. Department of Commerce is to release data on new home sales in April. And on Thursday the Labor Department releases data on weekly jobless claims and the Commerce Department reports on demand for durable goods, while Freddie Mac, the mortgage buyer releases weekly mortgage rates.
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