Business Economists Cut U.S. Recession Odds as Growth Picks Up
November 22, 2011, 11:13 AM EST
More From Businessweek
By Bob Willis
Nov. 21 (Bloomberg) — The U.S. economy will grow more than previously estimated through 2012, with little chance of another recession, led by gains in business investment and commercial construction, a survey showed.
Gross domestic product will expand 1.8 percent this year, more than a September forecast of 1.7 percent, according to results of a survey by the National Association for Business Economics issued today in Washington. The world’s largest economy will grow 2.4 percent in 2012 and consumer spending will increase by 2.1 percent.
About 30 percent of respondents said the recovery will continue at a “moderate pace” with unemployment falling “only gradually,” the report said. The share predicting another economic slump dropped to 7.4 percent from 13 percent in the last survey in September.
“Despite a relatively subdued outlook, the panel estimates that the odds of a second recession remain low,” Shawn DuBravac, chief economist at the Consumer Electronics Association and the chairman of the survey, said in a statement. “Business spending remains a strong positive and housing starts are expected to continue to rise from the bottom seen in 2010. The panel remains concerned about debt-related issues in Europe.”
Payrolls will increase by 100,000 workers a month on average during the fourth quarter of this year, and improve to gains of 130,000 by the end of next year, according to the group’s estimates. The jobless rate will fall to 8.7 percent by the end of 2012. NABE economists identified “excessive unemployment” as their single greatest concern.
Commercial Construction
Spending on nonresidential structures will grow 4.6 percent this year, compared with a 1 percent estimate in the prior survey. For 2012, commercial construction outlays will rise 4.5 percent, compared with a prior 3 percent estimate.
Purchases of equipment and software will remain a bright spot in the recovery, the group said. Spending will grow 11 percent this year and 8 percent next year, compared with prior forecasts of 9.2 percent for this year and 7.7 percent.
Twenty-nine percent of respondents, little changed from in September, said the recovery will be “subpar,” impeded by high debt levels, loss of wealth and financial-market headwinds.
Home construction will fall 1.7 percent this year and grow 4.3 percent next year, down from a prior estimate of 5.8 percent.
Home prices, as measured by the Federal Housing Finance Agency’s index, will decline 2.5 percent in the fourth quarter from the same three months last year. Next year they are projected to increase 0.9 percent.
Forty-nine NABE members responded to the survey, conducted Oct. 20 to Nov. 2. The National Association for Business Economics, founded in 1959, is the professional organization for people who use economics in their work.
–Editors: Carlos Torres, Vince Golle
To contact the reporters on this story: Bob Willis in Washington at bwillis@bloomberg.net
To contact the editor responsible for this story; Christopher Wellisz at cwellisz@bloomberg.net
READER DISCUSSION
Big week ahead, fellow cheapskates! And Im kicking it off with my annual guest appearance onCNETs Holiday Help Desk, which airs live today at 12 pm PT/3 pm ET. The big topic, of course, is Black Friday, and if you think you know what Im going to say about it, think again. Hope youll tune in!
That said, lets table Black Friday for a moment and talk Sweet Saturday. On November 26, American Express is sponsoring an event called Small Business Saturday. The upshot: Spend at least $25 at any independently owned local business (that accepts Amex, natch) and Amex will give you a $25 credit on your statement.
To put that another way, youre about to get 25 bucks worth of free stuff.
Whats the catch? For starters, you need an eligible American Express card (which I believe is any of them, consumer and business alike). Next, you have to register the card on American Express Facebook page.
Update: Actually, you dont have to use Facebook at all. Heres a direct link to the Small Business Saturday registration site.
And thats about it! There are some restrictions, of course: online purchases arent eligible, and youll have to steer clear of franchises, chain stores, and other large operations. This is for small-biz buys only.
Still, Im guessing you can find any number of mom-and-pop shops to patronize. How about the local pizza place,
car wash, bowling alley, or toy store? Its a win-win for everyone involved, and I commend American Express for supporting small businesses this way.
According to the Small Business Saturday terms and conditions, your $25 credit should appear within five business days. Thats cool–I kind of expected to have to wait at least one or two billing periods.
What are your thoughts on this? Worth braving a bit of traffic on Saturday? If so, what store do you think youll visit?
Bonus deal: An outfit called RandomBuy has theQ:Electronics noise-isolating earbuds for $4.99 shippedwhen you use coupon code WOOTFREESHIP. Theyre pretty slick-looking, and available in a wide assortment of colors. Great stocking-stuffer (or closing-nights-of-Chanukah filler). No idea how long this sale price–or coupon code–is good.
Ezra Holdings Ltd. (EZRA), a provider of
offshore logistics to the oil and gas industry, said its deep-
water subsea business may return to a profit next year as rising
energy demand spurs exploration.
“Demand for our services remain extremely strong despite
the European slowdown,” Lionel Lee, Ezra’s managing director,
said in an interview in Singapore on Nov. 18. “I don’t see even
in the next three to five years a slowdown in our activities.”
Ezra is bidding for subsea projects worth more than $6
billion globally, including $2 billion of contracts in the Asia-
Pacific region, it said last month. The subsea division, which
accounts for a third of Ezra’s revenue, posted an operating loss
of $18 million last fiscal year because of costs stemming from
the purchase of Aker Marine Contractors.
Order backlog for the business was about $745 million as of
October, including a contract from BP Exploration amp; Production
Inc. in the Gulf of Mexico, according to the company.
Ezra fell 5 percent to 86 Singapore cents on the island-
city’s stock exchange yesterday. The stock has dropped 52
percent this year, compared with a 15 percent decline in the
Straits Times Index.
Sales at the subsea business jumped more than eightfold to
$179.5 million in the year ended Aug. 31, accounting for 32
percent of the company’s revenue of $559.1 million. Ezra’s
overall net income dropped 47 percent to $40.4 million.
In October last year, the company agreed to buy 100 percent
of Aker Marine Contractors for $250 million from Aker Oilfield
Services AS. Ezra competes against Technip SA (TEC), Saipem SpA (SPM), and
Subsea 7 SA to offer services such as equipment installation
around oil fields on the seabed.
Ezra also offers offshore support services with its fleet
of anchor-handling and platform support vessels, besides
providing floating production and storage units as well as
shipbuilding.
To contact the reporter on this story:
Kyunghee Park in Singapore at
kpark3@bloomberg.net
To contact the editor responsible for this story:
Neil Denslow at
ndenslow@bloomberg.net
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DEAGLN de BRADN, Political Correspondent
STATEMENT:LABOUR NOMINEE for the presidency Michael D Higgins has disowned a statement issued on his behalf which criticised the voting record of Senator David Norris on the 2008 bank guarantee.
The statement, which was sent out by e-mail by his campaign on Wednesday evening, said the Trinity Senator was being somewhat economical with the truth when he has claimed on several occasions during the presidential election campaign that he voted against the bank guarantee.
The then government announced the decision to introduce the guarantee on the morning of October 1st, 2008: The official record of the Seanad (Vol 191-2) shows that Senator Norris did not speak in the Seanad debate on the Bill and did not participate in any of the Seanad votes on the legislation.
The statement added: The official record shows that only Labour Senators voted against this legislation.
It said Senator Norris voted against the scheme almost three weeks later, when public and media opinion had turned strongly against the guarantee.
But the critical vote was taken on October 1st: Senator Norris missed this crucial debate and votes and he should be more honest with the public on the issue.
Responding yesterday morning, the Norris campaign said: At 7.15pm on the evening of 1st October, 2008, Senator David Norris voted against the amendment to the Order of Business to allow the Seanad to force through a guillotined Bank Guarantee Bill which was being forced through the Dil and the Government then wished to force through the Seanad without an opportunity for appropriate debate.
The statement added: It is the Senators view that the statement issued by Michael D Higgins is intended to act as a deflection to his own support in 1993 for the Tax Amnesty Bill (Senator Norris voted against this Bill).
However, in a debate between the two candidates at NUI Maynooth, Mr Higgins said his statement was a botn san oifig (mistake in the office) and added: They didnt clear the statement with me before it went out. What happened as I understand it, was that, on the Order of Business, David voted on that. And then, on the substantive issue it went on through a long debate and thats what it is referring to.