The U.S. economy is headed for stronger growth in 2014 that will
steadily chip away at the unemployment rate, top economists predict in a
largely optimistic USA TODAY quarterly survey. The jobless rate,
which dipped to a five-year low of 6.6% in January, will fall to 6.3% by
the end of the year, their median forecast indicates.
Job gains,
which averaged 194,000 a month last year, will reach a monthly average
of 200,000 this year, they predict. Employers added 113,000 jobs in
January, well under many economists' forecasts, the government reported
last week.
The economy got off to a slow start in January as a
result of financial turmoil in emerging markets, a stomach-churning drop
in stock prices and extreme winter weather that kept many shoppers at
home. But the economists surveyed expect growth to accelerate after a
weak first quarter, reaching a solid 2.8% rate for the year.
"I
think we will regain momentum and not fall on our face," says Diane
Swonk, chief economist of Mesirow Financial, drawing a contrast with
previous ups and downs in the five-year-old recovery.
Many of the
40 economists surveyed Feb 5-6 recently cut their first-quarter
forecasts. Most of the change is due to the adverse January weather and
an expected pull-back in business stockpiling after firms aggressively
replenished shelves in the second half of 2013.
While growth late
last year was driven largely by the stockpiling, this year's expansion
will be fueled by higher consumer and business spending, says Dean Maki,
chief U.S. economist of Barclays Capital. "It's more durable," he says.
Many
were anticipating a breakout year in 2014, signaling a new course for a
generally sluggish recovery. Households have shed much of the debt they
amassed during the mid-2000s real estate bubble. A stock run-up and
rising home prices have made consumers feel wealthier. And the effects
of federal spending cuts and tax increases are fading, while state and
local governments are poised to increase outlays after years of
austerity.
Several economists say those improving fundamentals
remain intact. Some see financial troubles in emerging markets such as
Turkey and Brazil as risks to the USA's outlook. Chris Varvares of
Macroeconomic Advisers has trimmed his growth forecast, saying the
turmoil could curtail U.S. exports and stock prices, crimping business
investment and consumer spending.
But more than eight in 10 of
those surveyed said January's stock sell-off and emerging markets' woes
have not caused them to be less optimistic about growth this year.
Sixty-four percent said their 2014 forecasts are more likely to prove
too conservative than too rosy.
Maki says the recent stock swoon
pales compared to last year's market gains and is unlikely to hurt
consumer spending this year. Rising interest rates may cause Americans
to buy smaller homes, but they shouldn't deter purchases, he says.
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