U.S. Macroeconomic Forecasts Remain Positive, Europe Not So Much

Major economists remain optimistic about the U.S. economy during the next 18 months, according to the latest consensus forecasts from Blue Chip Economic Indicators. The 50 leading economic groups polled monthly by Blue Chip foresee rising growth rates for disposable personal income and consumer spending the rest of this year and in 2015. They also see continuing job creation and a drop in the unemployment rate.

Annualized inflation-adjusted (real) growth of gross domestic product in the U.S. is forecast at 3% for both the third and fourth quarters this year and 3% for the year as a whole in 2015. Disposable personal income growth is predicted to be 2.6% this year in real terms and ramp up to 2.8% next year. Consumer spending is forecast at 2.3% in ’14 and 2.7% in ’15.

Helping boost the projections are expectations from the economists that job growth will average 217,000 a month for the rest of 2014 and 216,000 a month in 2015. The forecast for the average unemployment rate in 2015 is 5.7%, the lowest level since 2007.

Meanwhile, conditions in Europe continue to deteriorate. Economies in Germany, France and Italy experienced real declines in GDP the second quarter and the forecasts are for further declines in the third quarter. The Eurozone as a whole would have contracted were it not for better than expected performance from Spain, Portugal and the Netherlands. On the other hand, real GDP growth in the U.K. is forecast at 3.1% this year, driven by growth in the service sector, and 2.7% next year.