WASHINGTON (AP) — The economy likely stumbled at the
start of this year, but there’s probably little reason to worry:
Economists foresee a solid rebound with the end of a harsh winter.
The
Commerce Department on Wednesday will issue the first of three
estimates of how fast the economy grew in the January-March quarter. The
expectation is that growth slowed to an annual rate of around 1.1
percent, a lackluster pace that would be sharply down from a 2.6 percent
annual growth rate in the previous quarter.
Economists think the
first-quarter slump, caused in large part by the severe winter, will
give way to stronger growth that should endure through the rest of the
year.
Most analysts say a bounce-back in consumer spending, business investment and job growth will lift growth
in the second quarter.
In
fact, many say 2014 will be the year the recovery from the Great
Recession finally achieves the robust growth that’s needed to accelerate
hiring and reduce still-high unemployment.
Analysts think annual
economic growth has rebounded to around 3 percent in the current
April-June quarter and will remain roughly that strong through the
second half of the year.
If that proves accurate, the economy will
have produced the fastest annual expansion in the gross domestic
product, the broadest gauge of the economy’s health, in nine years. The
last time growth was so strong was in 2005, when GDP grew 3.4 percent,
two years before the nation fell into the worst recession since the
1930s.
A group of economists surveyed this month by The Associated
Press said they expected unemployment to fall to 6.2 percent by the end
of this year from 6.7 percent in March.
One reason for the
optimism is that a drag on growth last year from higher taxes and deep
federal spending cuts has been diminishing. A congressional budget truce
has also lifted any imminent threat of another government shutdown. As a
result, businesses may find it easier to commit to investments to
modernize and expand production facilities and boost hiring.
State and local governments, which have benefited from a rebound in tax revenue, are hiring again as
well.
A
survey by the private Conference Board released Tuesday found that
while U.S. consumer confidence dipped this month, many people foresee a
strengthening economy in the months ahead.
Joel Naroff, chief
economist at Naroff Economic Advisors, said he expects job growth to
average above 200,000 a month for the rest of the year — starting with
the April jobs report, which will be released Friday.
"Those are the types of job gains which will generate incomes and consumer confidence going
forward," Naroff said.
Naroff
said solid job growth should lead consumers, who drive about 70 percent
of the U.S. economy, to boost spending. He expects pent-up demand from
purchases that were put off during the harsh winter to power a burst of
growth in the April-June quarter. He thinks annual growth for the
quarter will reach a vigorous 4.3 percent.
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