Economists feeling bit more sunny about 2012

By John W. Schoen, Senior Producer

The U.S. economy will gradually improve in 2012 as it continues to chug along at a relatively slow pace, according to a survey of business economists released Monday.

Still, the outlook represents a slight improvement from the last survey of the National Association for Business Economics in October, when only 16 percent of respondents expected the economy to reach a 2 percent annual growth.?

In the latest survey, about two-thirds of NABE Industry Survey panelists expect to see real gross domestic product top 2 percent between the fourth quarter of 2011 and the fourth quarter of 2012. Only 28 percent see GDP expanding between 1.1 percent and 2 percent - down from 70 percent ?in October. But few expect growth to top 3 percent this year.

?The survey results suggest increased optimism concerning real GDP growth, as well as fewer inflationary or deflationary pressures,? said Dr. Nayantara Hensel, professor of industry and business at National Defense University.

Despite the overall sluggish economy, businesses are still managing to make money, according to the survey. More than 80 percent of respondents reported that their companies were seeing unchanged or rising sales and profit margins. And they say inflation remains tame: Nearly all respondents expect that prices will remain unchanged or rise by 5 percent or less.

The prospects for growth in workers' paychecks aren't as rosy. More than 70 percent of respondents reported that wages and salaries have remained unchanged. And the share expecting a pickup in hiring over the next six months fell again compared to past surveys; almost two-thirds expect no change in employment. That's the highest percentage of panelists holding such a view in recent quarters.

The sluggish pace of hiring will likely be matched by continued investment in new equipment. A bigger share of economists surveyed expect capital spending to rise.

The group is surprisingly sanguine about the risks that could derail the recovery; many said they aren't all that concerned with possible fallout from the European debt crisis, the political battle over the payroll tax cut, or the lack of progress in cutting the national debt.

Source: http://bottomline.msnbc.msn.com/_news/2012/01/23/10201565-economists-gain-confidence-in-2-percent-growth-rate

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