Economists expect solid U.S. growth

Economists say the U.S. economy should expand at a solid pace this year and in 2011 as consumers become more confident and increase spending, according to The Wall Street Journal.

Forty-six economists were surveyed between April 27 and May 7 in the National Association for Business Economics (NABE) report and predicted U.S. gross domestic product (GDP) would expand by 3.2 percent in 2010 and 2011, which is slightly higher than the 3.1 percent predicted in the previous survey released Feb. 10.

Consumer spending accounts for more than two-thirds of U.S. GDP and drove economic growth during the first quarter of 2010.

"Although risks involving Europe recently have escalated, the outlook in this country has improved in most respects," says NABE President Lynn Reaser. "Growth prospects are stronger, unemployment and inflation are lower, and worries related to consumer retrenchment and domestic financial headwinds have diminished."

The U.S. savings rate is expected to average 3.4 percent this year compared with 4.6 percent predicted in February, and strong employment gains are expected through 2011, aside from a slowdown during the July to September period when temporary Census Bureau employees will lose their jobs. Economists expect the unemployment rate to drop to 9.4 percent by the end of this year and 8.5 percent by the end of 2011.

The economy in April added jobs at the fastest pace in four years, and personal spending and income data for April, which will be released Friday, are expected to show improved employment is starting to support incomes.

Additionally, economists are expecting credit conditions to ease for small businesses, low inflation and a weak housing sector.

Date : 5/25/2010