Economists see 3% US growth most of 2014

The U.S. economy will likely grow at 3 percent for most of next year, economists, analysts, academics and policymakers said in a survey released Monday. Sustained 3 percent growth in the gross domestic product is seen by many economists as a game-changing positive sign. "Three percent's the magic number," Joseph LaVorgna Deutsche Bank AG's chief U.S. economist, told Bloomberg Businessweek in March. The GDP -- which the Commerce Department said Thursday grew at an annualized, inflation-adjusted 2.5 percent in April through June, up from 1.1 percent in the first quarter -- is expected to reach the 3 percent growth rate in next year's second, third and fourth quarters, the National Association for Business Economics' September Outlook Survey indicated. The GDP, or the total value of goods and services produced in the country, is expected to grow 2.3 percent in this year's third quarter, which ends this month, and then 1.9 percent in the fourth quarter, before moving into a higher gear next year, the survey said. Economists often see prolonged 3 percent growth as giving the economy enough momentum to move into a "virtuous circle" of growth creating more growth. The U.S. economy is currently in a 5-year-old vicious circle stemming from the Great Recession and its causes. The vicious circle -- actually a complex of vicious circles -- started with the U.S. subprime mortgage crisis, economists, including Harvard University Professor Martin Feldstein, say. That crisis was followed by the vicious circles of the global financial crisis, the European sovereign-debt crisis, austerity, high levels of household debt, trade imbalances, high unemployment, and limited prospects for U.S. and global growth. Since the tentative U.S. recovery began in June 2009, the economy has seen just three quarters of growth 3 percent or higher -- the fourth quarters of 2009 and 2011 and the third quarter of 2012, Commerce Department statistics indicate. Beyond the GDP, the NABE survey forecasts next year's U.S. jobless rate will fall to an average 7 percent, reaching as low as 6.8 percent by 2014's fourth quarter. The Labor Department said Friday the rate was 7.3 percent in August and NABE estimated Monday it would be an overall 7.5 percent for the year. The rate was an average 8.1 percent last year. A 7 percent jobless rate is the level Federal Reserve Chairman Ben Bernanke has identified as the Fed's target for ending its economic-stimulus bond purchases, currently at $85 billion every month. Fed governors have said for several months the Fed is expected to start cutting back on the bond purchases "later this year." That time is widely interpreted as meaning after the Fed's next policy meeting Sept. 17-18. The NABE panelists put the odds the Fed will cut back on the bond purchases at less than 50-50 this year but said the probability would be 80 percent next year. The consumer price index, the most widely used inflation gauge, will grow 2.1 percent in 2014 after growing an average 1.6 percent this year, the panelists said. The Fed has targeted 2 percent inflation as what it would like to see because it says that rate is "most consistent over the longer run" with the central bank's "mandate for price stability and maximum employment." Economist John Williams, a former NABE member and founder of Shadowstats.com, told United Press International he believed the NABE survey results were solid in many areas but optimistic on the economic growth rate. "The economy has been bottom-bouncing" and will likely not achieve a sustained higher growth rate that most people can feel for at least two years, he said. "I'm not seeing anything in Washington that's giving me hope that it will be near- term," he told UPI in a phone interview. The looming federal budget-deficit and debt-ceiling crises, a widening U.S. trade deficit, household-income growth not keeping pace with inflation and persistent tight credit are strong headwinds to a strong recovery, he said. "The banks are somewhat better, but I wouldn't get too excited about that because they can't lend money," due to tight credit conditions, he told UPI. "If they could lend money, that would help the economy."