In their Q3 2012 survey, the National Association for Business Economics (NABE) predicts low growth throughout 2013 and an unemployment rate that will rise back above 8 percent for at least the first half of next year. However, the housing market is performing better than expected and should allow the economy to avoid falling off of a “fiscal cliff.” The surveyed economists foresee a rise in gross domestic product of just 1.9 percent in 2012 but improving to 3 percent by Q4 2013.
Employment growth is expected to weaken with the economy adding an estimated 125,000 jobs per month during Q4 2012, a substantial dip from May’s prediction of 190,000. The unemployment rate is forecast to rise to 8.1 percent potentially as early as October’s jobs report released on November 2. Single-family housing has been revised upwards to an increase of 23 percent, or 750,000 units, in 2012 and it is expecting to continue improving in 2013.
“The panelists’ projections for the fiscal cliff are very diverse, though survey respondents in general do not expect the potentially large negative outcomes of the fiscal cliff to materialize,” said Shawn DuBravac, chief economist at the Consumer Electronics Association, who analyzed the results for the NABE.
Over half of the surveyed economists say that the Bush tax cuts, scheduled to expire at the end of the year, will be renewed for at least another year for all income levels while 36 percent think they will be extended only for the lower income brackets. Over three-quarters of the polled economists agree that future automatic spending cuts will become diminished as new legislation is introduced.