Somewhere under all of that melting snow, there’s a warming economy.
“Adverse weather conditions” have hurt economic growth so far this year, but things are headed in the right direction now, according to a forecast released Monday by the National Association for Business Economics.
“Conditions in a variety of areas — including labor, consumer and housing markets — are expected to improve over the next two years, while inflation remains tame,” Jack Kleinhenz, NABE president and chief economist for the National Retail Federation, said in a statement.
Each month, the association surveys professional forecasters to get their sense of where the U.S. economy is headed. The March results showed economists are fairly optimistic about the rest of this year and next.
But first, the disappointing news about the winter: Most economists say the gross domestic product grew at only a sluggish annualized rate of 1.9 percent in this year’s first three months. That’s the same rate of slow growth pace seen for all of 2013, they said.
This new year was supposed to be better, but snow storms chilled the economy. “Unusually severe winter weather will subtract 0.4 percentage points from annualized real GDP growth in the first quarter of the year,” the NABE report said.
But as spring starts to settle in, growth will pick up, rising to a healthy 3 percent pace later in the year and continuing at 3.1 percent for 2015, the forecasters believe.
The economists see only a small chance — about 15 percent — of a recession coming within the next two years.
The NABE report found most economists think the unemployment rate will fall to 6.1 percent next year, down from the current 6.7 percent. And they expect both consumer spending to rise and the housing recovery to continue.
“New residential [housing] starts are expected to advance a further 15.1 percent this year,” while home prices rise will 5 percent, NABE said.
The improving economy should boost corporate earnings by 7 percent, both in 2014 and again in 2015, the forecasters said.
The panel of forecasters “expects the pace of economic expansion to accelerate this year — and next,” Kleinhenz said.