NABE Outlook Survey - March 2017


NABE Panel Expects Continued Expansion with Solid Job Growth through 2018; Economic Risks Biased Toward the Upside despite Likely Rise in Interest Rates 

The March 2017 NABE Outlook presents the consensus of macroeconomic forecasts from a panel of 50 professional forecasters (see last page for listing). The survey, covering the outlook for 2017 and 2018, was conducted between February 23 and March 9, 2017. The NABE Outlook Survey originated in 1965 and is one of three surveys conducted by the National Association for Business Economics (NABE); the others are the NABE Business Conditions 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 2,500 members and 40 chapters nationwide. Timothy Gill, CBE, American Iron and Steel Institute (chair); Steve Cochrane, CBE, Moody's Analytics; Gregory Daco, Oxford Economics; Keith Phillips, Federal Reserve Bank of Dallas; David Teolis, General Motors Company; and Richard Wobbekind, CBE, Leeds School of Business, University of Colorado/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 appropriate citation to NABE. 

SUMMARY: “Results from NABE’s March 2017 Outlook Survey show that expectations for economic growth through 2017 have remained largely unchanged,” according to NABE President Stuart Mackintosh, CBE, executive director, Group of Thirty. “Real GDP is expected to increase 2.3% in 2017, before accelerating to 2.5% in 2018. Nine out of 10 panelists believe there is a 25% or lower probability of a recession in the U.S. in 2017. Moreover, nearly 60% indicate that the balance of risks to the economy through 2018 is weighted to the upside. While a majority of the panelists expects corporate tax reform and individual tax cuts to be enacted in the second half of this year, 70% believe that the market is overpricing the impact of expected policy developments.” “Panelists expect higher oil prices, rising long-term interest rates, and further gains in compensation in 2017,” continued Mackintosh. “Various measures of inflation suggest gradually rising price pressures this year. In addition, the survey results reflect a strong improvement in the economy’s capacity to create new jobs. Consistent with these inflation and labor market developments, the panel anticipates that the Federal Reserve will raise the federal funds rate three times in both 2017 and 2018, bringing the midpoint of the target range to 2.125% by the end of next year.” 


  • Expectations for growth in real gross domestic product (GDP) from the fourth quarter of 2016 to the fourth quarter of 2017 have been revised upward to 2.4% from 2.2% in the December 2016 Outlook Survey. The revision reflects a more optimistic outlook for the second half of the year, with the average GDP growth rate forecasted for 2017 only slightly stronger at 2.3% (versus 2.2% in the previous survey). Overall, the panel expects economic growth in 2017 to be significantly stronger than the 1.6% average annual GDP growth rate in 2016. Longer term expectations are for average annual GDP growth to firm further to 2.5% in 2018.
  • The panel is almost evenly split on the timing of an infrastructure spending program when considering the baseline forecast. Thirty-eight percent expect that a policy addressing infrastructure spending will be enacted in 2017 while 40% assume it will be enacted in 2018. Four percent believe it will not be until 2019 or 2020 that such a spending program would be enacted, while 6% believe such a program will not be enacted during the current presidential term.
  • The majority (56%) of panelists believes that any impact of an infrastructure spending program on real GDP will not be felt in 2017. Approximately one-third (32%) expects a real economic impact between $1 billion and $100 billion this year, while 12% estimate the real economic impact would be more than $100 billion. Nearly two-thirds (65%) of survey participants predict a real economic impact between $1 billion and $100 billion in 2018, while one in five estimates a real impact of more than $100 billion next year. Sixteen percent anticipate no real impact of an infrastructure spending program in 2018.