Survey: Economists more upbeat on recovery

July 22, 2013

A new survey released Monday showed that economists are becoming more confident about the nation’s recovery but still expect only gradual improvement.

More than 70 percent of those surveyed by the National Association for Business Economics, an industry group, forecast that the economy will grow more than 2 percent over the next year. In January, only half of respondents were that optimistic.

The economists also reported that companies were hiring and expect to make capital investments. Three-quarters said they saw no impact from federal government spending cuts and tax increases that took effect this year.

The poll indicates the NABE panel “remains upbeat about the future,” said Timothy Gill, who headed the group’s survey committee.

The results are an encouraging assessment of the economy’s prospects ahead of next week’s release of the official measure of U.S. gross domestic product. Many private economists have cut their GDP forecasts for the second quarter. The consensus prediction is for a 1.5 percent annualized rate of growth.

The NABE survey covers a longer time frame, and many economists expect the recovery will pick up steam during the second half of the year. Still, the NABE poll cited several head winds that could hold back growth — among them, more government spending cuts, greater regulation and tumult in Europe.

The economists noted that sales growth slowed slightly during the second quarter. And though a majority said government cuts have not hurt business, a growing minority reported feeling the ripple effects.

Rising interest rates also emerged as a bigger concern than in past quarters. Fourteen of the 65 economists surveyed said they were worried about the short-term impact of higher rates — the same number who cited additional spending cuts as a risk.

“Consequently, optimism remains guarded,” Gill said.

The NABE survey is conducted quarterly and polls economists in industries such as transportation, agriculture and finance.

Ylan Q. Mui is a financial reporter at The Washington Post covering the Federal Reserve and the economy.
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