The economy is forecast to improve in 2013, but before then, the recovery is expected to crawl along with unemployment rising again above 8 percent, according to the quarterly survey by the National Association for Business Economists released Monday
The 44 surveyed business economists and others who use economics in the workplace project that the gross domestic product will wise 1.9 percent at an annual rate in 2012 before accelerating to a 3 percent pace by the fourth quarter of 2013,
After dropping to 7.8 percent in September, the unemployment rate is forecast to rise to 8.1 percent by the end of 2012. The NABE further that the economy will add 125,000 jobs per month over the course of the fourth quarter.
The economists expect single-family housing starts to increase 23 percent to 750,000 units in 2012, with a 13 percent rise to 850,000 forecast for next year. They project home prices to rise by 1.5 percent in 2012 and 2.8 percent in 2013, which is more optimistic than their May forecast.
A majority of the economists are confident that a deal will be reached on the fiscal cliff, the combination of about $1.2 million in mandated spending cuts and tax increases set to kick in at the end of the year. More than half (55 percent) believe the Bush-era tax cuts will remain in place for another year for all income levels, while just over one-third (36 percent) believe they will be extended only for lower income brackets. Just over three-fourths (77 percent) said the automatic spending cuts will be diminished by subsequent legislation.
The economists also forecast that inflation will remain low in 2013, while the Consumer Price Index is projected to increase 2.2 percent.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.