WASHINGTON (MNI) – The following are highlights from the National
Association for Business Economics’ November Outlook Survey published
Monday:

Summary: “Economists responding to the latest NABE Outlook Survey
expect moderate economic growth through 2012, with little likelihood of
another recession or an outbreak of inflation,” said NABE Outlook Survey
Chair Shawn DuBravac, chief economist at the Consumer Electronics
Association.

“The median forecast of respondents is for inflation-adjusted gross
domestic productreal GDPto grow at 2.5 percent in the final quarter of
2011 and 2.4 percent for the year in 2012. Despite a relatively subdued
outlook, the panel estimates that the odds of a second recession remain
low. Respondents expect consumer spending to grow below trend in 2012,
the unemployment rate is expected to decline only marginally over the
next year, and the consensus view of the panel is that monetary policy
will remain accommodative. There are several bright spots in the
outlook. Business spending remains a strong positive and housing starts
are expected to continue to rise from the bottom seen in 2010. Corporate
profits and stock prices are predicted to strengthen. But the panel
remains concerned about debt-related issues in Europe.”

Highlights

– The NABE Outlook panel predicts moderate real GDP growth through
year-end 2012. A 2.5 percent pace is expected during the fourth quarter
of 2011, followed by a 2.4 percent growth rate in 2012, with GDP in the
second half of 2012 slightly stronger than in the first half. The NABE
panel perceives uncertainty regarding future economic policies as a
major impediment to stronger economic performance, with poor confidence,
ongoing balance sheet restructuring, and a tepid housing market also
tempering a robust economic recovery.

– The odds of a second recession are low. Only two of 42
forecasters predicted a decline in real GDP over the nearterm. As a
group, the panelists saw a recession as the least likely scenario.
Forecast confidence has improved, but remains low. Seventy-two percent
of panelists characterized their forecasts as “somewhat” or “much” more
uncertain than usual. That figure is down from the 86 percent that held
this view in the September survey.

– The NABE Outlook panel expects employment will improve, albeit
very slowly. Monthly job gains are expected to rise steadily over the
forecast horizon, from an average of 100,000 during the fourth quarter
of 2011 to 130,000 by the end of next year. The jobless rate will
decline from 9.1 percent to 8.7 percent in 2012, but despite a majority
view of modest labor market improvement, NABE economists still
identified “excessive unemployment” as their single greatest concern
going forward.

– Growth in consumer spending is expected to remain below trend.
Consumer spending is forecast to increase 2.1 percent this yearthe same
consumer spending forecast as reported in the September survey. The NABE
Outlook Survey panel expects consumer spending to grow 2.1 percent in
2012. While still positive, this is well below the historical norm of
2.8 percent and suggests a tepid recovery. Light vehicle sales are
anticipated to grow at a modest pace from 12.6 million units this year
to 13.3 million in 2012. Personal savings is not expected to impede
consumer spending, with only 22 percent of the panelists anticipating a
higher personal savings rate.

– Housing starts are expected to increase 10 percent in 2012. The
economists participating in the survey expect housing starts to reach
600,000 units in 2011, just slightly above the 2010 total and a small
upward revision from the September Outlook Survey forecast. The housing
starts forecast for 2012 was revised downward slightly from the
September estimate of 700,000 units to 660,000 units. The projection for
home prices in 2011 was lowered slightly from a projected decline in the
Federal Housing Finance Agency (FHFA) index of 2 percent (Q4/Q4) in the
September survey to a decline of 2.5 percent in the November survey.
Home prices in 2012 are expected to increase slightly less than 1
percent.

– Business spending remains a bright spot in the forecast. NABEs
Outlook panel continues to forecast solid if not spectacular growth in
spending on business equipment and software in both 2011 (up 10.5
percent) and 2012 (an additional increase of 8 percent). The forecast
for real spending on nonresidential structures improved from that
reported in the September survey. Panelists now envisage spending on
structures to increase 4.6 percent in 2011 and 4.5 percent next year.
Industrial production is expected to increase 4 percent in 2011 and 3.3
percent in 2012. This moderate growth in industrial output will
contribute to the growth of business spending. Twenty-four percent of
respondents report the need of businesses to upgrade, replace, or expand
plant, equipment, and software, and this will be a major factor in
providing support for the economic recovery over the next two years.

– Respondents are slightly less optimistic about real export growth
and remain concerned about the European debt crisis. Respondents lowered
their 2011 and 2012 real export growth projections to 6.8 percent and
6.1 percent, respectively (from 7.8 percent and 7.9 percent,
respectively, in the September survey). Projections for real import
growth were also a tad weaker at 5.1 percent and 4.3 percent in 2011 and
2012 (compared with 5.3 percent and 4.7 percent in September).
Respondents currently expect real net exports to be more negative than
they did in September. Forecasters expect net exports to narrow from
-$421.1 billion (chained 2005 $) in 2010 to a projected – $415.4 billion
in 2011 (compared to -$403.5 billion in Septembers survey) to -$408.4
billion in 2012 (compared to -$387.8 billion in September). Respondents
anticipate the foreign exchange value of the dollar to be about the same
in December 2012 as in December 2011. The NABE Outlook panel currently
projects the foreign exchange value of the U.S. dollar to be 96.5 in
December 2012. That is slightly above the projected exchange value
forecast in the September Outlook Survey. Not much change is expected in
the euro, although its projected December 2012 value is now 1.37 U.S. $
per euro (compared to 1.40 US $ per euro reported in the September
survey). Asked whether Italy and Spain will face a “limited default”
similar to Greeces in the next 12 months, respondents were divided but
leaning slightly to the view that a default was unlikely. Panelists were
asked how concerned they were about 16 topics. Next to excessive
unemployment, panelists were most worried about the European sovereign
debt crisis.

– NABE panelists have made modest revisions to their inflation
forecasts. Projections for the Consumer Price Index in 2011 have risen
to 3.4 percent (Q4/Q4) in the November survey from the 3.1 percent in
the September survey. The surge in inflation is expected to be
transitory, as the panelists have held steady in their expectations for
the deceleration of CPI inflation to 2.0 percent for 2012. Panelists
have also raised slightly their outlook for “core” personal consumption
expenditures (PCE) inflation for 2011 and 2012 (Q4/Q4), with prices
(excluding the volatile food and energy sectors) anticipated to rise 1.9
percent in 2011 and 1.8 percent in 2012. Estimates for core PCE
inflation in both years have been revised upward by 0.1 percent from the
September survey.

– The NABE Outlook panel has trimmed its federal deficit
projections for 2012. As the supercommittee continues to meet behind
closed doors, NABE panelists have slightly raised federal budget deficit
projections for 2011 from $1.28 trillion to $1.30 trillion while
slightly lowering their projections for the federal budget deficit in
2012 from $1.11 trillion to $1.06 trillion.

– Survey respondents continue to expect monetary policy to remain
persistently accommodative. The panel expects the federal funds rate to
remain at current levels through the end of next year, in line with
Federal Reserve guidance. Twenty-one percent of respondents report
accommodative monetary policy as a major factor supporting the economic
recovery over the next two years and 45% view further balance sheet
expansionQE3as “likely” or “very likely.”

– Profits and stock prices are predicted to strengthen. Despite the
weak economic outlook, corporate profits are expected to rise 7 percent
this year and 6 percent in 2012. Forecasters have become somewhat more
optimistic about the stock market. The S&P 500 Index is expected to
advance in 2011s final weeks and reach 1380 in December 2012.

** Market News International Washington Bureau: 202-371-2121 **

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