Forecast for US growth rosier for rest of the year

US economic growth should accelerate in the second quarter and remain healthy for the rest of this year, according to economists’ forecasts. Still, growth for the full year will likely come in lower than they previously estimated.

Job growth should remain steady and consumer spending will also likely pick up, a survey by the National Association of Business Economists said yesterday. The survey of 47 economists from companies, trade associations and academia was conducted from May 8 to May 21.

The survey also found that economists increasingly agree that the Federal Reserve will end its bond purchase programme by the end of this year. That’s partly because economists are optimistic about growth for the rest of this year: They expect it will jump to 3.5 per cent in the second quarter and remain above 3 per cent for the rest of the year.

But the pickup comes after harsh winter weather caused the nation’s gross domestic product to contract 1 per cent in the first three months of the year, much worse than analysts had expected. GDP is the broadest measure of an economy’s output.

That weak first quarter reading has caused many economists to lower their expectations for 2014 as a whole.

The survey found that economists now project growth will be just 2.5 per cent this year, down from a forecast of 2.8 per cent in March.

The new forecast is still slightly above the annual average growth rate of about 2.2 per cent since the recession ended in June 2009 and up from 1.9 per cent in 2013. But stronger growth is needed to accelerate hiring and boost wage growth, which has been weak by historical standards.

The survey is slightly more pessimistic than the Federal Reserve’s most recent projections, released in March. The Fed expects growth will be between 2.8 per cent and 3 per cent this year. The Fed may lower its growth outlook for this year when it releases its next forecasts this month because of the first quarter’s contraction.