Moody’s Analytics, a leading provider of economic forecasts, expects
U.S. GDP growth to approach 3%, a sign that the recovery has kicked into
higher gear, according to the firm’s August outlook report, U.S.
Macro Outlook: Back in Stride. In the report, Chief Economist Mark
Zandi analyzes the factors behind the U.S. economy’s recent strength and
the Federal Reserve’s role in its stabilization.
“The wind-down of fiscal austerity is behind the pickup in GDP.
Government spending cuts shaved a full percentage point from real annual
GDP growth beginning in late 2010. With the fiscal situation improving,
purse strings are slowly opening again, especially among state and local
governments,” says Zandi.
The report notes that the private economy has also been growing, at
close to 3% per year, throughout much of the recovery. Employers are
adding well over 200,000 jobs per month and growth is spreading across
nearly all industries, regions and pay scales. Small business confidence
has also largely recovered from the recession, according to data from
the National Federation of Independent Business (NFIB) as well as
Moody’s Analytics’ survey of business sentiment.
“Jobs are being added fast enough to eliminate slack in the labor
market, estimated at 1.5% to 2%, by late 2016. This includes people
unemployed longer than six months, those who left the labor force
discouraged, and part-timers looking to transition to full-time. Wages
will also accelerate in occupations and regions where the job market is
tightening; labor shortages have already emerged in some parts of the
energy, high-tech, manufacturing and transportation industries,” says
Zandi.
However, the strengthened economy and tightening job market have
reignited the debate about the Federal Reserve’s bond-buying program.
Moody’s Analytics expects policymakers will begin raising short-term
rates by August 2015, aiming to normalize short-term rates in three to
four years, with a federal funds rate at just under 4%.
While Moody’s Analytics sees a potential threat to the outlook for
growth from the rise in interest rates, Zandi expects that the Federal
Reserve will be able to successfully manage this challenge, leading to
an economy growing at full stride.
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 the
proprietary analysis of 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 $3.0 billion in 2013, employs
approximately 8,500 people worldwide, and has a presence in 31
countries. More information is available at www.moodysanalytics.com.
Copyright Business Wire 2014