Economists: No Recession in 2012 with “Subdued” Growth

Economists see little chance of another recession in 2012, but the nation’s outlook remains “subdued,” with only a marginal decline in the unemployment rate and a slight-but-steady rise in housing starts.
Overall, the latest report from the National Association of Business Economics (NABE) is encouraging, especially in the areas of business spending, corporate profits and stock prices – all of which are expected to strengthen.
The NABE panel of 49 macroeconomic forecasters sees moderate real GDP (gross domestic product) growth through year-end 2012. A 2.5 percent pace is expected during the fourth quarter of 2011, followed by a 2.4 percent growth rate in 2012, with GDP in the second half of 2012 slightly stronger than in the first half.
“Economists responding to the latest NABE Outlook Survey expect moderate economic growth through 2012, with little likelihood of another recession or an outbreak of inflation,” said NABE Outlook Survey Chair Shawn DuBravac, chief economist at the Consumer Electronics Association.
One of the bright spots that NABE is forecasting is the resumption of a steady climb in housing starts from the bottom seen in 2010.
Housing starts are expected to increase 10 percent in 2012. The economists expect housing starts to reach 600,000 units in 2011, just slightly above the 2010 total and a small upward revision from the September forecast.
However, a recent study shows that the nation is far from recovering from the foreclosure crisis, with an estimated 3.6 million households at serious risk of losing their homes.
On the positive side, the odds of a second recession are low, NABE said. Only two of 42 forecasters predicted a decline in real GDP over the near term. As a group, the panelists saw a recession as the least likely scenario. Forecast confidence has improved, but remains low.
The NABE panel expects employment will improve, albeit very slowly.
Monthly job gains are expected to rise steadily, from an average of 100,000 during the fourth quarter of 2011 to 130,000 by the end of next year.
NABE reports that the jobless rate will decline from 9.1 percent to 8.9 percent in 2012.
“But despite a majority view of modest labor market improvement, NABE economists still identified ‘excessive unemployment’ as their single greatest concern going forward,” NABE reports.
Growth in consumer spending is expected to remain below expectations, but on the upswing. Consumer spending is forecast to increase 2.1 percent this year — the same forecast as reported in the September survey. The NABE panel expects consumer spending to grow 2.1 percent in 2012.

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