Economy Watch: Economists Less Dismal About Economy
- May 22, 2012
In its May 2012 Outlook, which was released on Monday, the National Association of Business Economists was a bit more optimistic than in the previous survey, published in January. The survey, which involved a panel of 54 forecasters queried in late April and early May, said that the outlook for U.S. employment growth continues to brighten. In the current survey, panelists raised their anticipated average monthly job change for 2012 to 188,000, up from the 170,000 anticipated in the previous survey.
The respondents also think that consumer spending will increase marginally this year—by 2.2 percent—and by 2.5 percent in 2013, and that housing starts will increase by 18 percent in 2012 to reach 720,000 units, up from 610,000 in 2011, though that’s still historically sluggish. On the other hand, the respondents were less optimistic about investment spending in 2012. The projection for real spending growth on nonresidential structures in 2012 was lowered from 4.2 percent in February to 2.9 percent in May, but was increased for 2013 to 5.5 percent.
“Economists responding to the latest NABE Outlook Survey expect moderate growth in the near-term with improvement coming in the post-election year,” NABE Outlook Survey chair Shawn DuBravac, chief economist at the Consumer Electronics Association, noted in a press statement. “While several forecasts have weakened slightly, there are also some signs of improvement. Expectations for housing, vehicle sales, employment, and industrial production all improved in the current survey.”
Vehicle miles driving up in March
The U.S. Department of Transportation reported on Monday that travel on all roads and streets in the nation saw an uptick of 0.9 percent (2.3 billion vehicle miles) in March 2012 compared with the same month last year. March was the fourth month in a row that recorded year-over-year increases in miles driven on American roads.
Though March’s numbers were up despite fuel prices, which were still rising that month, the total number of vehicle miles—which is one measure of economic activity–has never quite recovered from the gas-price shocks of 2008. Even the higher annualized totals for the year, if those estimates prove correct, would still be lower than the peak driving years of the the mid-2000s. Another longer-term factor in the lower number of vehicle miles might be the aging of the U.S. population, since older people tend to drive less.
Chicago Fed Activity Index rises
Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +0.11 in April from –0.44 in March, according to the central bank on Monday. Still, the index’s three-month moving average, the ponderously named CFNAI-MA3, ticked down to –0.06 in April from +0.02 in March, falling below zero for the first time since November 2011.
But it wasn’t very much below zero. April’s CFNAI-MA3 suggests that growth in national economic activity was near its historical trend. The economic growth reflected in this level of the CFNAI-MA3 also points to subdued inflationary pressure from economic activity over the coming year, notes the Fed.
Wall Street had had enough of gloom for the moment on Monday, seeing its largest gain in a few weeks (one that almost mocked the lackluster performance of Facebook). The Dow Jones Industrial Average gained 135.1 points, or 1.09 percent, while the S&P 500 was up 1.6 percent and the Nasdaq spiked 2.46 percent.