Blue Chip Economists Boost Key U.S. Macroeconomic Forecasts

The 50 leading economic forecasting groups polled monthly by Blue Chip Economic Indicators were slightly more optimistic about growth in the U.S. economy over the next 18 months, as reported in the October newsletter. The more upbeat assessment for U.S. growth was offset by increasing worries about the growth of economies in Europe and Asia.

The consensus forecasts for growth of real domestic product in the U.S. for 2014 and 2015 were boosted by 0.1 point each to 2.2% and 3.1%, respectively. Part of the gain can be attributed to lower expectations for inflation, said Randall Moore, executive editor of Blue Chip. “On balance, the consensus continues to predict that real GDP will grow at an above-trend pace of about 3% in the second half of this year and in 2015,” he wrote. One result is that the consensus expects the growth to continue to boost employment levels; the consensus now expects unemployment to fall to 5.4% by the end of 2015. It stood at 5.9% in September this year.

The forecast for growth of disposable personal income also increased, with real DPI now expected to grow 2.7% this year and 2.9% in ’15. Real personal consumption expenditures, essentially consumer spending, are forecast to rise 2.3% in ’14 and 2.7% next year. Income and spending trends are core foodservice drivers.

Meanwhile, the outlook for growth in most major European and Asian economies continued to deteriorate. The real GDP forecasts for Germany, France, the U.K, the Eurozone, Hong Kong and South Korea all fell by 0.1 point. The forecast for Japan fell 0.2 for this year, to 1%. Eurozone GDP growth is forecast at only 0.8% this year and 1.7% next. Growth for China’s economy remained steady at 7.4% for 2014 but fell to 7.1% in ’15. Real GDP growth in India is now forecast at 5.5% this year, up 0.1 point; its forecast for 2015 held at 6.1%.