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Economists see growth accelerating in 2015

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Economists see growth accelerating in 2015

Median forecast of 3.1% GDP growth in 2015 tops 2.2% for 2014.

A panel of economists believes that 2015 will be a good year for the US economy.

According to a survey by the National Association for Business Economists, the US economy will grow 3.1% in 2105, topping its estimate for final 2014 GDP growth of 2.2%

“Economists participating in NABE’s December 2014 Outlook Survey expect economic growth to accelerate in 2015,” according to NABE President John Silvia, chief economist of Wells Fargo. The Outlook Survey panelists anticipate the solid pace of output growth will be accompanied by continued labor market firming, with nonfarm employment expanding by nearly 220,000 jobs per month next year and the unemployment rate falling to 5.4% by the fourth quarter of 2015. These views are slightly more optimistic than those expressed in NABE’s previous Outlook Survey released in September.”

"Panelists have generally trimmed their forecasts for inflation over the last three months.” 

“Meanwhile, panelists have generally trimmed their forecasts for inflation over the last three months,” says NABE Outlook Survey Chair Timothy Gill, deputy chief economist of the National Electrical Manufacturers Association, “in part due to much lower oil price expectations. At the same time, views on the timing and pace of Federal Reserve policy tightening have shifted. Consensus continues to build that a hike in the federal funds rate will take place in the middle of next year, but a plurality of panelists—46%—now believes the increase will occur in the third quarter of 2015 rather than in the second quarter as was expected in September. Likewise, the path of the federal funds rate is expected to be shallower than was predicted in September, reaching only 0.75% by the end of 2015, compared to 0.845% forecast in the previous survey. This forecast is substantially lower than the median FOMC member's latest assessment of the appropriate rate. Similarly, the 10-year Treasury note yield is now forecasted to be 3.2% at the end of 2015, lower than the 3.5% forecasted in September.” 

Other findings from the survey included:

The median of the five most pessimistic responses for 2014 real GDP growth (Q4/Q4 basis) is 2.0%, while the median of the five most optimistic responses is 2.5%. The range of forecasts for 2015 is considerably broader, with the median of the five lowest at 2.2% and the median of the five highest at 3.8%. Consistent with this range of expected outcomes, the median probability that the U.S. economy will enter a recession in the next 12 months is 10%, while the median probability that real GDP growth will exceed 3% over the same time period is 50%. These probability estimates are identical to those reported in September.

The outlook for the labor market has also brightened. The median forecast for the annual average unemployment rate is 6.2% in 2014 and 5.6% in 2015. 

This is an improvement over the September survey projections, which foresaw an average of 6.3% unemployment this year and 5.8% next year. The outlook for nonfarm payroll growth increased modestly in the December survey to 226,000 net new jobs per month in 2014 and 217,000 per month in 2015. 

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