Eco­nomic growth:

Eco­nomic panel says re­bound in hous­ing will help to off­set slower busi­ness in­vest­ment.

Austin American-Statesman - - FRONT PAGE - Con­tin­ued from B

Busi­ness econ­o­mists pre­dict the coun­try will see mod­est growth in 2013 with strength coming from a fur­ther re­bound in hous­ing which will help off­set weak­ness in busi­ness in­vest­ment.

WASHINGTON — Busi­ness econ­o­mists pre­dict the coun­try will see mod­est growth in 2013 with strength coming from a fur­ther re­bound in hous­ing, which will help off­set weak­ness in busi­ness in­vest­ment.

In its lat­est sur­vey of top fore­cast­ers, the Na­tional As­so­ci­a­tion for Busi­ness Eco­nom­ics says it is look­ing for the econ­omy to grow in 2013 by 2.1 per­cent af­ter 2.2 per­cent growth in 2012.

That would con­tinue the same tepid growth the coun­try has seen since the re­ces­sion of­fi­cially ended in mid-2009.

Growth at that pace is not strong enough to make a sig­nif­i­cant im­prove­ment in un­em­ploy­ment. The NABE econ­o­mists be­lieve un­em­ploy­ment will av­er­age 7.7 per­cent for all of next year, right at the level it reached in Novem­ber.

The 48 NABE econ­o­mists on the panel had about the same out­look as their Oc­to­ber forecast. While they have mod­est ex­pec­ta­tions for 2013, they do see growth slowly im­prov­ing as the year pro­gresses.

The econ­o­mists forecast growth in the gross domestic prod­uct, the econ­omy’s to­tal out­put of goods and ser­vices, at 1.6 per­cent in the cur­rent Oc­to­ber-De­cem­ber quar­ter, down from 2.7 per­cent growth in the July-Septem­ber pe­riod.

Part of that slow­down, the econ­o­mists be­lieve, will re­flect the dis­rup­tions caused by Su­per­storm Sandy, which slammed into the North­east on Oct. 29. About half of the econ­o­mists sur­veyed be­lieve Sandy will cut growth by 0.2 per­cent­age point to 0.5 per­cent­age point in the cur­rent quar­ter and about one-third of the sur­vey panel be­lieve re­build­ing from the storm will

in­crease growth by a sim­i­lar 0.2 per­cent­age point to 0.5 per­cent­age point range in the first three months of next year.

The NABE panel is look­ing for GDP growth at an an­nual rate of 1.8 per­cent in the first quar­ter fol­lowed by rates of 2.4 per­cent in the April-June quar­ter, 2.6 per­cent in the third quar­ter and 3 per­cent in the fourth quar­ter next year.

Nayan­tara Hensel, head of the NABE panel and a busi­ness pro­fes­sor at the Na­tional De­fense Univer­sity in Washington, said part of the op­ti­mism that growth will be im­prov­ing is a be­lief that the government will come to a res­o­lu­tion of the fis­cal cliff,

Panel ex­pects growth to rise each quar­ter dur­ing 2013.

the sharp in­creases in taxes and spend­ing cuts that will hit in Jan­uary if Congress and the Obama ad­min­is­tra­tion do not reach a bud­get deal.

“The pan­elists be­lieve that once there is greater clar­ity on bud­get and tax is­sues, you will see less un­cer­tainty on the part of busi­nesses and con­sumers,” she said.

The pan­elists ex­pect hous­ing will once again be a stand­out per­former with res­i­den­tial in­vest­ment grow­ing at an an­nual rate of 12 per­cent next year.

Builders are ex­pected to break ground on 930,000 new homes in 2013, up 21 per­cent from this year, while home prices are ex­pected to in­crease 3.5 per­cent, af­ter an ex­pected 3 per­cent gain this year.

But the pan­elists look for busi­ness in­vest­ment in equip­ment and soft­ware and struc­tures to slow in 2013.

They are also look­ing for af­ter-tax cor­po­rate prof­its to show an in­crease of 5 per­cent, down from an ex­pected 8.5 per­cent gain in 2012.

Among the other pre­dic­tions in the lat­est NABE sur­vey:

Em­ploy­ers will add an av­er­age of 165,000 jobs per month next year, a slight im­prove­ment from the 150,000 monthly job av­er­age so far this year.

In­fla­tion will re­main mod­est with the Fed­eral Re­serve’s pre­ferred in­fla­tion gauge ris­ing just 1.8 per­cent. That is be­low the Fed’s 2 per­cent tar­get. Oil prices are ex­pected to av­er­age $93.20 per bar­rel in De­cem­ber 2013, only a slight in­crease from $86.70 cur­rently.

Longer-term in­ter­est rates will rise slightly with a 10-year Trea­sury note at 2.25 per­cent at the end of next year, up from 1.70 per­cent cur­rently. The Fed­eral Re­serve is ex­pected to keep short­term rates un­changed at a record low near zero for all of next year.

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