By Hal M. Bundrick NEW YORK ( MainStreet)--A slow and steady course of improvement is forecast for the U.S. economy, according to the Securities Industry and Financial Markets Association's (SIFMA) Economic Advisory Roundtable. The analysts expect the economy to grow at a rate of 1.7% for the full-year 2013 and 2.6% in 2014. "Our Roundtable maintains their forecast for moderate economic growth for 2013 and 2014, with upside and downside drivers varied among respondents," says Kyle Brandon, managing director and director of research at SIFMA. "Generally, the continued housing recovery and low energy prices were seen as positive drivers of growth, while external factors such as Europe and emerging markets featured as the downside risks to the economy."
The median forecast called for gross domestic product (GDP) to rise 1.7% in 2013 on a year-over-year basis, and by 2.0% on a fourth quarter-to-fourth quarter basis. For full year 2014, the median forecast was 2.6% year-over-year; on a quarterly basis, the first two quarters of 2014 were expected to stabilize at 2.7 and 2.9% annualized GDP growth, respectively. Incremental improvement is anticipated in the outlook for jobs but unemployment is expected to remain at elevated levels throughout 2013 and 2014. Survey respondents predicted the full-year average unemployment rate to decline to 7.5% in 2013, a slight improvement from the end-year 2012 forecast of 7.7%, with a further decline to 6.9% expected in 2014.
Three-quarters of those surveyed expect the FOMC to reduce the pace of securities purchases as early as September 2013, with the remainder expecting a reduction sometime in the fourth quarter of 2013 or by January 2014 at the latest. As to the expected end of Fed securities purchases, over half look to the second quarter of 2014, slightly less than a third expect an end in the first quarter of 2014, and the balance in the third quarter of 2014.
Nearly all (90%) of respondents believed the impact of sequestration lowered GDP growth for 2013 by up to 100 basis points. But one respondent noted that higher taxes would be a "larger drag on economic growth in 2013 than spending cuts."