Will The Economy Start To Rev Up Soon? [AUDIO]
A new report finds economists are increasingly optimistic about growth in the year ahead, and they expect hiring to pick up in the coming months.
A quarterly survey by the National Association for Business Economics shows more than half of the economists polled now expect real gross domestic product, the value of all goods and services produced in the United States, to grow between 2 and 4 percent in 2013.
Rutgers economist James Hughes says, "This way well be an overly optimistic forecast because we have the new payroll tax being instituted, we have higher tax rates on high income individuals, and one expectation is that's going to lower growth in the first half of the year…There's still a lot of uncertainty because we've kicked some elements of the fiscal cliff issue down the road, and we're going to have to revisit that in terms of the debt ceiling going forward, and we have some questions on business capital investment."
He says, "Hiring will take place if firms believe they need more bodies to conduct their business, so that would reflect rising expectations in terms of business revenues and the like…And the fact that the financial markets are growing rapidly lately doesn't necessarily mean anything, since there's often a disconnect between market performance and the underlying economy."
Hughes adds fears about inflation seem over-blown.
"A driving force for inflation historically is rising energy costs - but we're in a situation today where a surplus of natural gas is really causing some energy prices to decline, so absent that energy push, I think inflation is just simply a modest problem at best."
He says the bottom line is "Moving forward I think the general outlook would be between 2, 2 ½ percent GDP growth for all of 2013…Growth in the 4 percent range just doesn't seem in the cards - revenue growth in corporations probably will not be able to justify that level of output."