AP Survey: US Budget Impasse Holding Back Economy
Businesses "aren't willing to hire people or invest in plant and equipment knowing the uncertainty," says Sung Won Sohn, an economics professor at California State University Channel Islands. "The prudent thing to do is to postpone."
The AP survey collected the views of private, corporate and academic economists on a range of issues. Among their views:
â¿¿ The economy will grow 2.2 percent this year, a modest pace that roughly matches the average annual rate since the recession ended in June 2009. In a typical economy, such growth wouldn't be a concern. But it hasn't been enough to repair the damage from the Great Recession. Faster growth â¿¿ 4 percent to 5 percent annually â¿¿ would be needed to rapidly reduce the unemployment rate, which is still painfully high at 7.9 percent.
â¿¿ Growth should increase in 2014 to 2.9 percent, economists expect. That would be the fastest for a full year since the recession ended and would roughly match the average for the five years preceding the Great Recession. Still, the economists foresee the unemployment rate at 6.3 percent by the end of 2015 â¿¿ nearly three years from now. In a normal economy, the unemployment rate is below 6 percent.â¿¿ Just over half think Europe's recession will end this year. That could benefit U.S. exporters. The 17 nations that use the euro have been in recession since mid-2012. But some encouraging signs have emerged: Germany reported a larger-than-expected budget surplus this month. And German business confidence rose in February for a fourth straight month. â¿¿ Nearly half think sales of previously occupied homes will return to normal levels next year. More than six years after the housing bubble burst, residential real estate is finally rebounding. Sales in 2012 reached 4.7 million. That's still well below the 5.5 million in annual sales considered healthy. But 17 of the economists think sales will return to that level in 2014. Ten others think it will happen in 2015.
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