Business economists more optimistic about growth despite harsh winter
Peter McAuley uses his lawn tractor to clear snow from his driveway in Winchester, Va. Despite the harsh winter, business economists expect economic growth to improve this year. (Jeff Taylor / Associated Press / )
WASHINGTON -- Economists for U.S. businesses are more optimistic about the recovery than they were three months ago, forecasting growth to accelerate this year after a slow start caused by severe winter weather.
The media projection in the quarterly survey by the National Assn. of Business Economics, released Monday, is for the economy to expand at a 2.8% annual rate this year. The figure is up from a projection of 2.5% in December.
The economy expanded at a 1.9% annual rate last year.
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The improved outlook comes despite respondents saying the bitter cold and snow in much of the country would reduce total economic output -- or gross domestic product -- in the first three months of the year by 0.4%.
'Despite a challenging start to the year in which adverse weather conditions will likely shave nearly one half of one percentage point from first-quarter real GDP growth, NABE's March 2014 Outlook Survey panel expects the pace of economic expansion to accelerate this year - and next,' said Jack Kleinhenz, the group's president and also chief economist of the National Retail Federation.
The 48 economists surveyed expect slightly less labor market growth this year, with the economy forecast to add 188,000 net new jobs a month compared with the monthly average of 194,000 in 2013.
But job creation will be strong enough for the Federal Reserve to end its bond-buying stimulus program this year. About 57% of the economists surveyed expect the program to end in the fourth quarter of the year.
A quarter of respondents expect the Fed to end the program before Oct. 1.
Fed policymakers last week voted to reduce the bond buying to $55 billion a month -- the third reduction since December.
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