Economists are forecasting faster growth than they were in November, according to a quarterly survey from the National Association for Business Economics.
Although economists say the U.S. economy will continue to expand through next year, boosted by rising consumer and business spending, joblessness is expected to remain high and the pace of the housing recovery will be sluggish.
The 47 economists polled in the survey expect the economy to grow 3.3 percent this year. That's up from November's prediction of 2.6 percent growth. It's also higher than last year's 2.9 percent growth rate. The faster growth will be driven by pent-up demand from consumers ready to spend again, strong growth in Asia and business spending on new equipment and software.
Economists are "concerned about high levels of government deficits and debt, excessive unemployment, and rising commodity prices," the president of the association, Richard Wobbekind, said in a statement. Wobbekind is associate dean of the Leeds School of Business at the University of Colorado.
For 2012, the panel expects the economy to grow 3.4 percent from 2011. This is "consistent with the moderate pace of growth" that usually takes place during recoveries from severe financial crises such as the meltdown that led to the Great Recession, the report said.
Nearly 40 percent of the survey's respondents think that the recovery will continue to grow moderately, while one third believe expansion will be more robust. Only 11 percent _ or about five of the respondents _ expect the growth to be "subpar." That's down sharply from the 40 percent who thought this in November.
The labor market is improving slowly. On average, employers are expected to add 178,300 jobs per month this year. The economists predict that 210,000 jobs will be added to payrolls in each of the last three months of 2011.
At the same time, unemployment will stay high, with the rate averaging 9.3 percent in the first quarter of this year and inching slightly lower to 9 percent in the fourth. By the last quarter of 2012, the joblessness rate will still be high _ 8.2 percent. In January, the unemployment rate was 9 percent.
The outlook for consumer spending has improved, and is expected to grow 3.2 percent this year. That's up from a 2.4 percent growth forecast in November. In 2012, spending is expected to rise by 2.9 percent, which is the same as the annual growth rate over the past 20 years.
The NABE panelists see business spending as a bright spot in 2011 and 2012, with double-digit percentage growth in spending on equipment and software. But spending on structures remains weak, expected to grow just 1.4 percent in 2011. By next year, however, this is expected to grow by 4.8 percent.
In 2011, the panel expects the federal deficit to reach $1.4 trillion, up from the earlier forecast of $1.1 trillion. The panelists see the federal debt as "their single greatest concern going forward, even exceeding worries about high unemployment, and far greater than concerns about either inflation or deflation," the report said.
The housing market is expected to stay tepid, with most panelists expecting home prices to bump along "at a cyclical low," the survey found.
The survey was conducted between Jan. 25 and Feb. 9.