September 2014 NABE Outlook
The September 2014 NABE Outlook presents the consensus of macroeconomic forecasts from a panel of 46 professional forecasters (see last page for listing). The survey, covering the outlook for 2014 and 2015, was conducted August 25- September 9, 2014. The NABE Outlook Survey originated in 1965 and is one of three surveys conducted by NABE; the others are the NABE Business Conditions Survey and the NABE Economic Policy Survey. Founded in 1959, the National Association for Business Economics is the professional association for those who use economics in their work. NABE has over 2,500 members and 41 chapters nationwide. Timothy Gill, National Electrical Manufacturers Association (chair); Craig Alexander, TD Bank; Robert Kleinhenz, Los Angeles County Economic Development Corporation; Ken Simonson, Associated General Contractors of America; and Richard Wobbekind, Leeds School of Business, University of Colorado at Boulder, conducted the analysis of survey responses for this report. The views expressed in this report are those of the panelists and do not necessarily represent the views of their affiliated companies or institutions. This report may be reproduced in whole or in part with appropriate citation to NABE.
SUMMARY: “Respondents to NABE’s September 2014 Outlook Survey expect the pace of economic growth to steady following an unusually high degree of volatility in the first half of the year,” according to NABE President-Elect John Silvia, chief economist at Wells Fargo. “The median forecast calls for real GDP to advance at a seasonally adjusted annualized rate of about 3% in the third and fourth quarters of 2014 and throughout 2015. However, real GDP growth for all of 2014 is expected to reach just 2.0% on a Q4/Q4 basis due to a sizable decline early in the year. The 2014 annual growth rate would thus be a deceleration from the 3.1% rate in 2013. The consensus of the panel is that economic growth will rebound to 2.9% in 2015. Measured on an annual average basis, real GDP growth is expected to increase 2.1% in 2014 and 3.0% in 2015.
“These views reflect tempered expectations compared to those reported in NABE’s previous full outlook survey released in June, but still are stronger than those expressed in an abbreviated supplemental survey conducted in early July following the release of extensively revised first-quarter data. Panelists are more optimistic in their forecasts for business fixed investment, government outlays, and international trade activity than they were in June, but their expectations for consumer spending and residential investment are lower, citing weak income growth and difficulty in accessing credit as primary factors hampering growth in those categories.”
“Consistent with median forecasts of payroll growth of more than 200,000 jobs per month, a decline in the unemployment rate to 5.7% by the end of 2015 and rising inflation, a large majority of panelists—69%—believe the Federal Reserve will begin to raise the federal funds rate target in the second or third quarters of next year,” said NABE Outlook Survey Chair Timothy Gill, deputy chief economist of the National Electrical Manufacturers Association. “The median federal funds rate forecast at the end of 2015 is 0.845%, slightly higher than in June. In contrast, the 10-year Treasury note yield is now forecasted to be 3.5% at the end of 2015, lower than the 3.75% expected in June.”