The U.S. economy will continue to chug along and is unlikely to slip back into a recession, a University of Central Florida economist said in a quarterly forecast on Thursday.
Sean Snaith, director of the UCF Institute for Economic Competitiveness said, while a surge in the rate of economic growth is anticipated in the third quarter of 2011, acceleration in GDP growth is not expected to continue.
“Unfortunately, we anticipate that the staccato pattern of the economic recovery will persist and growth will again decelerate in the fourth quarter to just 1.0 percent,” said Snaith.
He added that, average consumption spending growth is projected to be just 2.0 percent over the next five year span of 2010-2014 and this is a formidable handicap for the U.S. economy, where consumer spending is 70 percent of overall GDP.
Other highlights of the quarterly forecast include:
- Markets have little faith in the Fed’s latest effort to jump start the economy and rightly so.
- Oil prices have receded in the third quarter and this will have a soothing effect on consumers’ rattled nerves and battered budgets.
- Consumers still grieve the loss of home equity. Home equity remains essentially at the same levels seen at the nadir of the financial crisis. This burden of lost wealth will keep consumer spending growth subdued through 2014.
- The U.S. economy lost impetus in the first half of 2011. Real GDP growth should accelerate to 2.6 percent in the third quarter but slips to 1.0 percent growth in the fourth quarter.
- GDP growth in 2012 should average 1.5 percent and accelerate to 2.5 percent in 2013 and then to 3.7 percent in 2014.
- Unemployment rates have ticked up in recent months. However, 2011 should end with an unacceptable unemployment rate at 9.2 percent. Unemployment rates will drift to 9.3 percent in 2012 before falling ever so slowly to 7.8 percent by the end of 2014.
