Economists have grown more optimistic about the outlook for U.S. growth next year, predicting the expansion will accelerate as 2011 progresses, according to the latest Wall Street Journal forecasting survey.
The 55 respondents, not all of whom answer every question, raised their growth projections for gross domestic product for nearly every period, including the current quarter. On average, the economists now predict GDP will grow 2.6% in the current quarter at a seasonally adjusted annual rate, up from the 2.4% growth they projected in last month’s survey. The economy grew 2.5% in the third quarter.
The economists now see stronger expansion in the first half of 2011, with growth picking up speed as the year progresses. For the year, they expect GDP will rise 3%. Meanwhile, they have reduced the odds of a double-dip recession to 15%, the lowest average forecast of the year, from 22% in September survey.
It’s a bit hard for me to identify the basis for such predictions. I would think that improved economic growth would require improvement in one or all three of energy prices, home prices, and unemployment.
LONDON—Crude-oil futures gained more ground on relief that China, one of the world’s global economic motors, refrained from hiking interest rates over the weekend despite rising inflation.
Stronger equities markets also provided some support to oil futures.
The front-month January Brent contract on London’s ICE futures exchange recently was up $1.48, or 1.6%, at $91.96 a barrel. The front-month January light, sweet crude contract on the New York Mercantile Exchange was trading up $1.24, or 1.4%, at $89.03 a barrel.
NEW YORK (CNNMoney.com) — U.S. home prices fell 2% in the third quarter after having gained steadily since early 2009.
The S&P Case-Shiller Home Price Index has recorded gains in four of the previous five quarters, including a 4.7% jump between April and June 2010. That leaves national home prices down 1.5% year over year and off 2% compared to the second quarter, according to the Index, which was released Tuesday.
David Blitzer, chairman of the Index Committee at Standard & Poor’s, attributed some of the decline to the end of the government program that paid tax incentives to homebuyers but he pointed to other problems weighing on the housing market.
The unemployment rate edged up to 9.8 percent in November, and nonfarm payroll employment was little changed (+39,000), the U.S. Bureau of Labor Statistics reported today. Temporary help services and health care continued to add jobs over the month, while employment fell in retail trade. Employment in most major industries changed little in November.
On top of that employment has declined through the year.
I can only speculate that economists’ views reflect the Wall Street/Main Street divide that we’ve seen operating for the last couple of years. It’s quite possible for the financial sector to grow as the remainder of the economy stalls or even contracts. And we’re about to hit a wall—we’re nearing the point at which (hat tip: Calculated Risk) those who lost their jobs at the trough of the now technically over Great Recession will exhaust their unemployment benefits and the bills before Congress do nothing to alter that. The current proposal extends the program, not benefits.