NABE Outlook December 2013

The December 2013 NABE Outlook presents the consensus of macroeconomic forecasts from a panel of 51 professional forecasters (see last page for listing). The survey, covering the outlook for 2013 and 2014, was conducted November 8-19, 2013. The NABE Outlook 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 over 2,300 members and 39 chapters nationwide. Timothy Gill, National Electrical Manufacturers Association (chair); Craig Alexander, TD Bank; Robert Kleinhenz, Los Angeles County Economic Development Corporation; Ken Simonson, Associated General Contractors of America; and Richard Wobbekind, Leeds School of Business, University of Colorado at Boulder, conducted the analysis of survey responses for this report. The views expressed in this report are those of the panelists, and do not necessarily represent the views of their affiliated companies or institutions. This report may be reproduced in whole or in part with a proper citation to NABE.

Summary: “Economists participating in the December 2013 NABE Outlook Survey expect the pace of economic growth to accelerate in both 2013 and 2014,” said Survey Chair Timothy Gill, deputy chief economist at the National Electrical Manufacturers Association. “While the federal government shutdown is likely to weigh on growth in the fourth quarter of 2013, the economy posted a surprisingly strong third-quarter performance. Consequently, the median forecast of the panel is for annual economic growth in 2013 to advance at a 2.1% pace—higher than expectations reported in the September survey. Looking ahead to next year, panelists forecast real GDP growth of 2.8% in 2014, down slightly from the 3% gain expected in September. The U.S. economy is likely to experience some headwinds in 2014. Most panelists believe that the Federal Reserve will begin to rein in its policy of quantitative easing in the first half of 2014, and that additional sequestration cuts will negatively affect economic growth throughout the year. However, survey results reflect the view that another government shutdown or a default on federal obligations early in 2014 is unlikely. Consistent with a solid pace of output growth, nonfarm payrolls are expected to increase by nearly 200,000 per month next year, with the unemployment rate falling to an average of 7%. Forecasts for several major components of GDP have been shaved since the September survey, yet most are still expected to post improved growth in 2014 relative to 2013. While prices are expected to advance at higher rates in 2014, inflationary pressures are expected to remain contained.”


• Real GDP is expected to expand at a slightly higher rate in 2013 than previously forecast, and to accelerate in 2014. The panel expects a 2.1% real GDP growth rate—measured from the fourth quarter of 2012 to the fourth quarter of 2013. That result is an increase from the consensus GDP growth forecast of 1.9% in the September survey. The growth rate is expected to increase to 2.8% in 2014 (Q4/Q4), slightly lower than the 3% rate predicted in the previous survey. Real GDP grew 1.7% in 2012. Panelists anticipate real GDP growth to accelerate steadily from a 1.8% annual rate in the fourth quarter of 2013 to 3% in the fourth quarter of 2014. The medians of the five lowest and five highest individual forecasts for 2014 are 1.9% and 4.0%, respectively.

• Labor markets are projected to improve. Nonfarm payrolls are forecast to post an average monthly gain of 177,500 for all of 2013, less than the 183,000 recorded in 2012 and below the 189,000 predicted in the September survey. However, panelists anticipate stronger job creation in 2014, with an average monthly nonfarm payroll increase of 197,000. The unemployment rate is expected to average 7.5% in 2013 and decline to 7.0% in 2014. Affordable Care Act provisions are expected to trim 10,000 from monthly payroll growth in 2014.

• Tighter fiscal policy is playing a role in lowering the expectations for near-term economic growth. Three-quarters of the panelists believe October’s partial shutdown of the federal government will have a negative impact on fourth quarter 2013 real GDP growth. Even so, most expect the impact to be modest, with 73% predicting a loss of less than 0.5 percentage points of growth. Meanwhile, 88% of panelists predict additional sequestration cuts of some form will take effect in 2014, but 76% expect the negative impact will be limited to less than 0.5 percentage points of real GDP growth.

NABE members can download the full report here.