Moody’s Analytics, a leading independent provider of economic
forecasting, today released Chief Economist Mark Zandi’s US economic
outlook for August. According to “U.S.
Macro Outlook: Nearing the Threshold,” the recent lag between GDP
growth and U.S. job creation is unusual and unlikely to continue.
Moody’s Analytics expects real U.S. GDP growth of 2.75% for the second
half of 2013 and near 3% for 2014.
According to the report, weak GDP growth of 1.4% over the past year, is
at odds with growth in gross domestic income and stronger job numbers.
Historical data suggests that current U.S. job growth of 200,000 per
month is consistent with a GDP growth rate as high as 3%. The disconnect
between GDP growth and job growth may eventually be bridged by
revisions, which will show GDP growth stronger than current data
suggests, the report says.
“Weak GDP reflects temporarily weaker productivity growth and large
government spending cuts,” Zandi said. “Encouragingly, reduced economic
uncertainty and improving credit conditions will boost the private
economy and lead to larger gains in both output and jobs.”
The report notes that the housing recovery will be a significant driver
of job growth. While homebuilding and house prices have risen strongly
since they hit bottom almost two years ago, the housing recovery has
only begun. Housing starts are still running well below 1 million units
per year, while the underlying demand for new homes supports an annual
building rate closer to 1.7 million. Every new single family home
supports more than four jobs in construction, manufacturing,
transportation, financial services, retail, and a range of other
services in the year the home is put up. Each multifamily unit supports
slightly more than one job.
“The anticipated increase in homebuilding through mid-decade should thus
add some 3 million jobs to the nation’s payrolls, a key to returning the
economy to full employment,” Zandi added.
The report also notes that the housing recovery is critically dependent
on access to credit for first-time home buyers, mobilization of idle
resources to build homes and, most importantly, the Federal Reserve’s
plans to unwind its monetary stance, including quantitiatve easing and
near-zero interest rates.
The report concludes that quantitative easing will end by summer 2014
and rates will rise by summer 2015.
For more information, visit Moody’s Analytics Dismal
Scientist.
About Moody’s Analytics
Moody’s Analytics helps capital markets and risk management
professionals worldwide respond to an evolving marketplace with
confidence. The company offers unique tools and best practices for
measuring and managing risk through expertise and experience in credit
analysis, economic research and financial risk management. By providing
leading-edge software, advisory services and research, including
proprietary analyses from Moody’s Investors Service, Moody’s Analytics
integrates and customizes its offerings to address specific business
challenges. Moody's Analytics is a subsidiary of Moody's Corporation
(NYSE: MCO), which reported revenue of $2.3 billion in 2011, employs
approximately 6,700 people worldwide and has a presence in 28 countries.
Further information is available at www.moodysanalytics.com.
Copyright Business Wire 2013