If you’re looking for the American economy to roar back to life in the second Obama term, Barron’s “Economic Beat” columnist Gene Epstein advises you to take another look.
Not so impressed, apparently, by rising house prices, lower gasoline prices, and the recent bull market in stocks, the consensus of 50 forecasters, polled monthly by Blue Chip Economic Indicators, still has quite modest growth expectations for real gross domestic product through this year and next.
According to the Blue Chip report released Friday, the consensus projects growth (on a fourth-quarter-over-fourth-quarter basis) at 2.3% this year and at 2.8% in 2014. If those forecasts prove true, it would mean that, in the 5½ years since the recession ended in 2009’s second quarter, there will have been no four-quarter period in which growth ran as high as 3%, a relatively low bar in previous expansions.
Two components of GDP that generally show strength in expansions, but aren’t expected to this time, are consumer spending and investment in plant and equipment. Real consumer spending rose at an annual rate of 3.2% in the first quarter, but the consensus expects it to slow to 2.0%-2.5% this year and 2.5%-2.7% next year. Plant and equipment investment is expected to grow at just 4.9% this year and 6.0% in 2014, down from 8.0% in 2012 and 8.6% in 2011.
The unemployment rate, currently 7.5%, is expected to tick down to 7.4% by the fourth quarter of this year, and to 6.9% by fourth quarter 2014 — still noticeably higher than the 6.5% target set by Fed Chairman Ben S. Bernanke.
The 10 most optimistic forecasters of the 50 do foresee 3% growth, projecting 2.9% (again, on a Q4/Q4 basis) this year and 3.5% in 2014. The optimistic consensus also foresees the jobless rate falling to 6.6% by fourth-quarter 2014, just about at Bernanke’s target.
Asked why job growth has been running so unusually slow during this recovery, respondents blamed, among other factors, the “high degree of policy uncertainty.”
