Sunday, May 15, 2011
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May 16 (Bloomberg) -- The economy in the U.S. will grow less than previously estimated this year as rising commodity costs hurt consumers, a survey showed.
Gross domestic product in the world's largest economy will expand 2.8 percent in 2011, down from the 3.3 percent rate forecast in February, according to results of a survey by the National Association for Business Economics issued today in Washington. Consumer and business spending will also increase less than projected three months ago, while employment forecasts were revised up.
"The economy is facing a little more in the way of challenges," Richard Wobbekind, NABE president and associate dean of the University of Colorado's Leeds School of Business in Boulder, said in an interview. "The rise in commodity prices has added a bit more of a concern, but the economy is still on a path to strong and sustainable growth."
Climbing food and energy prices have tempered consumer spending in recent months, reducing the amount of income Americans have to spend on other goods and services. At the same time, NABE panelists forecast the acceleration in inflation caused by commodities will "be largely temporary."
The cost of living in the U.S. as measured by the consumer- price index will rise 2.8 percent in the 12-months ended in December, up from the 1.8 percent forecast in the last survey. The Federal Reserve's preferred inflation measure, which excludes food and energy, will advance 1.6 percent by the end of the year, compared with the previous estimate of 1.2 percent.
Crude Oil
Oil will average $105 per barrel in December, the survey showed. Prior forecasts showed the fuel at $93 per barrel.
Consumer spending, which accounts for about 70 percent of the economy, will increase 2.8 percent this year, down from the previous forecast of 3.2 percent, according to the survey.
The economists also lowered their estimates for business investment in equipment and software by 0.2 percentage point, forecasting it will expand 11.9 percent in the fourth-quarter from a year earlier. In that period, spending on nonresidential structures will drop 2.8 percent, down from a prior forecast for a 1.4 percent increase.
About 34 percent of respondents said the recovery will continue at a "moderate" pace with output growing at or slightly above potential, while about 29 percent are more optimistic about growth, the survey showed. Eleven percent characterized the expansion as "subpar."
"Even though there's a slight downward revision for growth, employment has picked up more rapidly," Wobbekind said. "The positives are more rapid hiring in the short run and a lower unemployment rate both this year and next."
Employers will add 190,300 workers to payrolls each month on average in 2011, 12,000 more than previously forecast, the survey showed. Unemployment will average 8.7 percent, 0.4 percentage point lower than projected in February.
Forty-one NABE members responded to the survey, conducted between April 13 and May 1. The National Association for Business Economics, founded in 1959, is the professional organization for people who use economics in their work.
--Editors: Carlos Torres, James Tyson
Source: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/05/15/bloomberg1376-LL56BY07SXKX01-448NNS0I3D71QALROSNF02LH6O.DTL#ixzz1MUzZwVyF
.
May 16 (Bloomberg) -- The economy in the U.S. will grow less than previously estimated this year as rising commodity costs hurt consumers, a survey showed.
Gross domestic product in the world's largest economy will expand 2.8 percent in 2011, down from the 3.3 percent rate forecast in February, according to results of a survey by the National Association for Business Economics issued today in Washington. Consumer and business spending will also increase less than projected three months ago, while employment forecasts were revised up.
"The economy is facing a little more in the way of challenges," Richard Wobbekind, NABE president and associate dean of the University of Colorado's Leeds School of Business in Boulder, said in an interview. "The rise in commodity prices has added a bit more of a concern, but the economy is still on a path to strong and sustainable growth."
Climbing food and energy prices have tempered consumer spending in recent months, reducing the amount of income Americans have to spend on other goods and services. At the same time, NABE panelists forecast the acceleration in inflation caused by commodities will "be largely temporary."
The cost of living in the U.S. as measured by the consumer- price index will rise 2.8 percent in the 12-months ended in December, up from the 1.8 percent forecast in the last survey. The Federal Reserve's preferred inflation measure, which excludes food and energy, will advance 1.6 percent by the end of the year, compared with the previous estimate of 1.2 percent.
Crude Oil
Oil will average $105 per barrel in December, the survey showed. Prior forecasts showed the fuel at $93 per barrel.
Consumer spending, which accounts for about 70 percent of the economy, will increase 2.8 percent this year, down from the previous forecast of 3.2 percent, according to the survey.
The economists also lowered their estimates for business investment in equipment and software by 0.2 percentage point, forecasting it will expand 11.9 percent in the fourth-quarter from a year earlier. In that period, spending on nonresidential structures will drop 2.8 percent, down from a prior forecast for a 1.4 percent increase.
About 34 percent of respondents said the recovery will continue at a "moderate" pace with output growing at or slightly above potential, while about 29 percent are more optimistic about growth, the survey showed. Eleven percent characterized the expansion as "subpar."
"Even though there's a slight downward revision for growth, employment has picked up more rapidly," Wobbekind said. "The positives are more rapid hiring in the short run and a lower unemployment rate both this year and next."
Employers will add 190,300 workers to payrolls each month on average in 2011, 12,000 more than previously forecast, the survey showed. Unemployment will average 8.7 percent, 0.4 percentage point lower than projected in February.
Forty-one NABE members responded to the survey, conducted between April 13 and May 1. The National Association for Business Economics, founded in 1959, is the professional organization for people who use economics in their work.
--Editors: Carlos Torres, James Tyson
Source: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/05/15/bloomberg1376-LL56BY07SXKX01-448NNS0I3D71QALROSNF02LH6O.DTL#ixzz1MUzZwVyF
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