NEW YORK (MainStreet) — The long and bumpy road to economic recovery just got a little smoother: Experts have revised predictions of the nation’s economic outlook, which isn’t as weak as previously thought.
The National Association for Business Economics (NABE), which releases a quarterly assessment of the overall U.S. economy, revised its earlier growth projections Monday. The group now expects the country’s gross domestic product, considered the best measure of economic expansion, to increase at a moderate pace of 3.5% through the current year and into 2012.
Back in November, NABE expected the GDP to increase by a decidedly less substantial 2.7% in 2011.
According to NABE president Richard Wobbekind, the upward revision was motivated by “pent-up consumer and business demand, strong growth in foreign economies and accommodative monetary policy.”
NABE also said that the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, the bipartisan compromise passed by Congress last December, is expected to contribute 0.5 percentage points to growth in 2011 and 0.1 percentage points in 2012.
Of course, for those who have become accustomed to the doom and gloom typically associated with the economic forecasts, there was still plenty of bad news included in NABE’s latest report.
“Factors restraining growth include financial headwinds, uncertainty about future federal government economic policies, a tepid housing market and sustained high unemployment,” Wobbekind said in a written statement. “Panelists do remain confident about the expansion’s durability, but are concerned about high levels of government deficits and debt, excessive unemployment and rising commodity prices.”
NABE’s latest forecast is based on predictions made by a panel of 47 economists, polled between Jan. 25 and Feb. 9. The latest findings are in line with other economic data of late: not decidedly bad news, but not exactly good news either.
For instance, NABE said it expects joblessness to remain high, with the unemployment rate averaging 9.3% in the first quarter of this year and edging down to 9% in the fourth quarter of 2011. The unemployment rate is then anticipated to decline to a still-high 8.2% in the final quarter of 2012.
To put this in perspective, economists traditionally believe the “normal” or “natural” unemployment rate hovers around 5% in the U.S., though the Federal Reserve Bank of San Francisco did say recently that 6.7% might be a more reasonable rate in light of recent economic shifts.
Want to know more about what could happen to the economy this year? Read MainStreet’s 11 money prophecies for 2011!
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