NABE Outlook February 2013
NABE Forecasters See Rising GDP Despite Fiscal Threats
The February 2013 NABE Outlook Survey report presents the consensus of macroeconomic forecasts from a panel of 49 professional forecasters. (See last page for listing.) The survey, covering the outlook for 2013 and 2014, was conducted January 28-February 5, 2013. The NABE Outlook Survey originated in 1965 and is one of three surveys conducted by NABE; the others are the NABE Industry Survey and the NABE Economic Policy Survey. Founded in 1959, the National Association for Business Economics is the professional association for those who use economics in their work. NABE has 2,400 members and 37 chapters nationwide. Dr. Nayantara Hensel, National Defense University; Ken Simonson, Associated General Contractors of America; William Strauss, Federal Reserve Bank of Chicago; Richard Wobbekind, University of Colorado; and Clare Zempel, Zempel Strategic, conducted the analysis for this report. The views expressed in this report are those of the analysts and do not necessarily represent the views of their affiliated companies or institutions. This report may be reprinted in whole or in part with a proper citation to NABE.
“NABE panelists expect real GDP to grow by 2.4% from the fourth quarter of 2012 to the fourth quarter of 2013 and to grow by 3% for 2014,” said Dr. Nayantara Hensel, Chair of the NABE Outlook Survey Committee and Professor of Industry and Business at National Defense University. “Over 95% of the panelists believe that growth in real GDP in 2013 is likely to be negatively affected by uncertainty surrounding the US fiscal imbalances and issues linked to the continuing resolution, sequestration, and the debt ceiling. Almost 60% of those surveyed suggest that sequestration will occur in either partial form or full form on March 1. Moreover, they forecast that government consumption expenditures and gross investment will decline by 1% in 2013 and will be followed by a milder 0.2% decline in 2014. They also expect that real personal consumption expenditures will continue last year’s 1.9% growth rate in 2013 and then accelerate to 2.5% growth in 2014. Panelists suggest strong growth in residential investment, housing starts, and home prices. Although industrial production and nonresidential structures are forecast to grow slightly more slowly, panelists continue to forecast strong growth in nonresidential equipment and software and light vehicle sales. Those surveyed indicated that inflation will continue to remain close to 2% through 2014 and, on a positive note, suggest that the civilian unemployment rate will show some improvement in 2013 and 2014. Finally, panelists believe that several of the European countries are likely to need ‘bailout’ packages. About one-third of panelists believe that Spain will require a larger ‘bailout’ package in 2013 than was previously anticipated, almost a quarter of the panelists believe that Italy will require a ‘bailout’ package in 2013, and about a fifth of panelists believe that Ireland will require a second ‘bailout’ package in 2013. Only 14% of the panelists suggest that Greece may break away from the euro currency in 2013.”
- The estimates of the panelists regarding the growth in real GDP (inflation-adjusted gross domestic product) from the fourth quarter of 2012 to the fourth quarter of 2013 have remained constant since the December 2012 survey at 2.4%, while the panelists are suggesting an improvement in real GDP growth to 3% in 2014, which is higher than the 1.5% actual growth in 2012. Similarly, the annual average percentage change in real GDP has shown continued flatness since the last survey in December, with panelists estimating 2% growth in 2013 and an improvement to 2.8% growth in 2014. Panelists forecast a gradual acceleration in the annual GDP growth rate, growing from 2% in the first quarter of 2013 to 3% by the fourth quarter of 2013, and then stabilizing to between 2.8% and 3.1% between the first quarter of 2014 and fourth quarter of 2014.
- Over 95% of the panelists believe that growth in real GDP in 2013 is likely to be reduced, given the uncertainty surrounding the US fiscal imbalances—the issues linked to the continuing resolution, sequestration, and the debt ceiling. Over half of the panelists expect that real GDP growth will be reduced by less than half a percentage point, almost one third of panelists believe that it will be reduced by between half a percentage point and one percentage point, and only about 13% suggest that it may be reduced by more than one percentage point.
- Panelists in the February 2013 survey have forecast that real government consumption expenditures and gross investment will decline by 1% in 2013, which is a steeper decline than the -0.6% that the panelists had estimated in the December 2012 survey. On a positive note, however, panelists suggest that government consumption expenditures and gross investment will decline by a milder 0.2% in 2014.
- Almost 60% of the panelists suggest that sequestration will occur in either partial form (over one third of panelists) or in full form (about a quarter of panelists) on March 1. Over a quarter of panelists believe that sequestration will be further deferred, and about 13% of panelists believe that sequestration will not occur. Furthermore, panelists forecast that the federal deficit will be -$900 billion in fiscal 2013 (October 2012-September 2013) and -$761 billion in fiscal 2014, which is down from -$1089 billion in fiscal 2012.
- Panelists expect that real personal consumption expenditures will grow 1.9% in 2013, which is the same growth rate as in 2012. Panelists expect growth in real consumption expenditures to improve to 2.5% for 2014.
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