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Link to WSJ article that polled 56 economists about the Economic Outlook of the US through the current calendar year. The U.S. economic recovery is expected to gain momentum over the rest of this year. "On average, the 56 economists polled downgraded their estimate of first-quarter growth in gross domestic product to 2.7% at a seasonally adjusted annual rate. That is down from an average first-quarter forecast of 3.6% just two months ago. The economy grew at a 3.1% rate in the fourth quarter." Many of the respondents are weary of the weak housing market, severe weather, declining confidence, and the earthquake in Japan as factors contributing to the pullback growth during the just-finished first quarter.
The improvement in the outlook of the economists was extended to the labor market. "Economists on average see the U.S. adding about 200,000 jobs a month over the next year. Though that number isn't strong enough to bring down the unemployment rate quickly, as the economy struggles to make up ground lost during the recession, the unemployment rate is seen continuing its downward trajectory. " These projections have caused many of the economists to predict that the Federal Reserve will begin to raise interest rates sooner than expected. This article was interesting in that there seemed to be a consensus that the single biggest factor that could inhibit growth is the price of oil sparked by Mideast unrest.
Unrest in Libya and Nigeria produce a great amount of high-quality crude oil a day and are both in the midst of civil unrest. Any reduction in crude exports from those countries could result in lower consumer confidence, and worries about demand represent a sharp turn from the concerns over supply disruptions that have driven oil futures up by nearly 20% this year.
Do you have any opinions on the economic outlook of the future in the US as we try to pull ourselves out of a financial crisis? What do you guys think about the positive outlook amidst the turmoil that is taking place in African countries (oil prices, oil commodities, and etc.)?
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I do believe oil prices will fall in the near-ish future. Oil prices have always been cyclical, they always seem to shoot up for some reason or another but eventually they fall back down for a bit before yet another thing happens that causes them to rise.
ReplyDeleteEconomists say the economy is on its way back up, however the housing market is still terrible. True, it's a great market for buying, however no one should buy a house at the moment unless they plan on staying there for at least 10-15 years. This is a problem for people who work in jobs that require them to transfer every few years, or for expanding families. Most of the articles I've come across state that economists are currently unsure if the housing crisis is going to get better or worse in the next coming years. Has anyone come across any other articles that state otherwise?
This was a positive and promising article about the future of the US economy, which is always refreshing from negative articles. I think that the future of the US will be determined later this week when President Obama makes his speech about government cuts in spending for the long-run. As many of the economists said in the article, I believe that the price of oil will play a huge role in the economic outlook of the US. This is why I'm a firm believer in green technology. It's hard to say what will happen with oil prices because of the turmoil in the African countries but I believe that gas prices tend to shoot up then drop low so I'm hoping these high prices will follow the pattern and drop low within the next few months.
ReplyDeleteNice article here Ankur, it was a good read. I found it interesting/excellent that a majority of economists thought oil would fall below below $100/barrel by next winter. It's too bad we are going to be paying $4+ per gallon of gas this entire summer. Good news for us graduatates looking forward though, the "experts" think unemployment is going in the right direction.
ReplyDeleteI hope that unemployment is decreasing, however what impacts will it have on inflation? The good ol' Philips Curve tells us that inflation will increase and the dollar will continue to de-value. What are the implications of this?
ReplyDeleteI'm with Manor on developing new technology. I also think we need to make the transition to better and more comprehensive public transportation. Given the immense size of the US, I realize this is a difficult task, but I think it needs to happen.
ReplyDeleteHow do we fund this? I think we put a huge "sin tax" on gasoline (though, not until the market mounts a full recovery).
I know I will see some opposition to this from free market people and people who just want to have cheap gas, but I am sick of being toyed with by OPEC. The oil market is not competitive. I think we need to control our own destiny.
Very interesting article Ankur! Dane makes a very good point here. There is no competition within the oil market. I feel someone or some organization will have to step in to stop OPEC in their jerking around of gas prices.
ReplyDeleteStrong points had by all here. Lots of good data supporting long term economic strength. Unfortunately, I think there is a short term storm brewing. QE2 as we touched briefly on today is coming to an end in June.
ReplyDeleteWhile the economy is currently conservatively stronger than when QE2 started and is on less "life support" than one year ago, removing a leg of economic support (QE2) will clearly have an impact.
I'm pretty sure that its our government that keeps oil prices low for consumers, considering its high costs in most other countries. The government promotes oil and gas spending because our car industry is so huge and pivotal to our economy, at least Michigan's economy. I don't know how much longer we can keep up with low prices. Natural inflation and the scarcity of oil and natural gas will force prices to increase more and more. The (relatively) low prices won't sustain forever.
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