Economists bullish on consumer spending
Consumer spending is likely to pick up this year, while government spending declines at a faster rate, according to a survey of business economists.
The economists predict the U.S. economy will grow 2.4 percent this year and 3 percent next year. That's unchanged from their forecast in February.
But they are more bullish on consumer spending and housing than in February, in part because of a more positive view about unemployment.
The survey was released Monday by the National Association for Business Economics, which periodically surveys economists for banks, manufacturers and universities.
The 49 economists who were questioned between April 16 and April 30 predicted consumer spending will rise 2.3 percent this year, up from a forecast of 1.9 percent in February. They were also more upbeat about auto sales, predicting 15.4 million vehicle sales, an increase of 1 million over 2012.
Nayantara Hensel, chair of the NABE survey and a business professor at National Defense University, said consumer spending will get a boost from gains in the stock market, home values and lower unemployment.
While consumers might spend more, the government sector is expected to shrink 2.3 percent this year -- sharper than the 1 percent cut the economists predicted in February, before sequestration kicked in. The economists expect government spending to decline 0.9 percent in 2014, but Hensel said the forecast could decline further if the automatic cuts continue into the next fiscal year.
Lower government spending, especially by the military, "has already had a sharp effect on GDP growth," she said. GDP, or gross domestic product, is the measure of the economy's total output of goods and services.
The NABE survey found little alarm about potential inflation. The economists expect the Consumer Price Index to rise 1.9 percent this year and 2.1 percent in 2014.