Consumer Spending Forecast To Rise
Government Spending Expected To Decline At Faster Rate
A survey released Monday by the National Association for Business Economics (NABE) found that consumer spending is likely to pick up this year, while government spending is expected to decline at a faster rate. The survey reached out to economists for banks, manufacturers and universities. The 49 economists predicted that consumer spending will rise 2.3% this year. They also predicted that the U.S. economy will grow 2.4% this year and 3% next year. Corporate profits after taxes are expected to rise 5.3% in 2013 and 7.5% next year. Both of those are more bullish forecasts than the economists offered in February.
While consumers might spend more, the government sector is expected to shrink 2.3% this year – sharper than the 1% cut that the economists predicted in February, before a series of automatic federal spending cuts kicked in. The economists expect government spending to decline a more modest 0.9% in 2014. Nayantara Hensel, chair of the NABE survey, said the forecast could change to a bigger decline if it looks like the automatic cuts will continue into the next fiscal year.
The NABE survey found little alarm about potential inflation. The economists expect the Consumer Price Index to rise 1.9% this year and 2.1% in 2014. A board economist said the economy was getting a lift from steady job gains and the housing market, offsetting government spending cuts.