Saturday, September 1, 2012

US. economic growth forecast 2013- 2014

US. economic growth forecast 2013- 2014, US, unemployment rate forecast 2013-2014, Industrial production : the U.S., second quarter real GDP growth was revised up to 1.7 per cent from 1.5 per cent. More positively, growth in real final sales was upped to 2.0 per cent from 1.2 per cent. The inventory cycle is less of a drag on future production than initially estimated. Industrial production rose 0.6 per cent in July boosted by a 3.3 per cent increase in motor vehicle and parts production but leaving a modest 0.2 per cent growth excluding autos.

However recent Fed manufacturing surveys point to weakness ahead. Recessions in various EZ countries will hurt exports and the most severe drought in decades will hurt agricultural and food production. July retail sales were positive rising more than expected, up 0.8 per cent in July. Some of this could be a payback for a weak June.

Our report suggests consumption is off to good start this quarter. This strength will not hold up in light of weaker consumer confidence in August and the distraction of the upcoming election and policy uncertainty.

U.S. housing remains on a modest recovery path. Existing-home sales and prices increased in July and remain well above year-ago levels. New housing construction is also recovering from its recession lows but remains at historically low levels, especially when adjusted for population. Housing’s modest recovery contributes to economic growth.

Personal income grew 0.3 per cent in July and was up 3.6 per cent from one year ago. Adjusted for inflation, personal income was up 2.3 per cent from last July. Real per capita personal income was up 1.6 per cent and it continues to recover at a modest pace from the recession mostly geared to improvements in the labour market and labour income. To reach its pre-recession level will take another 18 months or so.

In the next three to six months, leading economic indicators do not signal a recession. U.S. economic growth is forecast around 1.5 to 2.5 per cent in Q3 and Q4-2012. There is considerable concern about 2013 due to the automatic fiscal tightening of about 4 per cent of GDP. In theory, a recession could ensue if nothing is done but it is highly improbable that politicians would knowingly cause a recession. The likely outcome is some stopgap or modified policies will avoid the full negative hit to the economy.

Even the most pessimistic among the forecasters surveyed do not expect a recession next year. A few see quarterly growth slowing to an annual 1 per cent rate compared to the average or consensus forecast in the 2.0 to 3.0 per cent range. However, recession calls exist. For example, the ECRI maintains its recession call made in late September 2011.

For 2014, economic prospects improve with the ongoing pursuit of self-interests by consumers and businesses under stimulative monetary conditions, constant technological change, and higher growth in Europe and the emerging economies. The U.S. economy is expected to expand almost 3 per cent in 2014.

Fed unemployment rate forecast 2013-2014
Federal Reserve analysts projected that the unemployment rate could stay near 8 percent through 2014, as the committee downgraded the economic forecast for 2013 and 2014.

The Federal Open Market Committee said today that the unemployment rate will range between 6 and 8 percent for the next two years. They indicated that 7 percent is the most likely unemployment rate.

When asked why "the forecast for 2013 and 2014, the growth forecast, is downgraded," Federal Reserve Chairman Ben Bernanke said "I suspect that the fiscal issues may be part of that."

He maintained, however, that "the 2013 numbers are stronger than the 2012 numbers and the 2014 numbers are stronger than the 2013 numbers" despite that downgrade

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