Economists Predicting 2012 as Year of Growth
WASHINGTON (AP) – The U.S. economy will grow faster in 2012 – if it isn’t knocked off track by upheavals in Europe, according to a survey of three dozen economists.
Unemployment will barely fall from the current 8.6 percent rate, though, by the time President Barack Obama runs for re-election in November, the economists say.
The private, corporate and academic economists expect the economy to grow 2.4 percent next year. In 2011, it likely grew less than 2 percent.
The year is ending on an upswing. The economy has generated at least 100,000 new jobs for five months in a row – the longest such streak since 2006.
The number of people applying for unemployment benefits has dropped to the lowest level since April 2008. The trend suggests that layoffs have all but stopped and hiring could pick up.
And the economy avoided a setback last week when legislation was passed to extend a Social Security tax cut that was to expire at year’s end. But Congress could agree only on a two-month extension.
The economists surveyed Dec. 14-20 expect the country to create 177,000 jobs a month through Election Day 2012. That would be up from an average 132,000 jobs a month so far in 2011.
Dean Maki, chief U.S. economist at Barclays Capital, says the U.S. economy remains vulnerable to an outside shock. A big threat is the risk that Europe’s debt crisis will trigger a worldwide credit freeze like the one that hit Wall Street in late 2008.
A shock to the U.S. economy, he says, might not be as dangerous if it were growing at a healthier 4 percent to 5 percent annual pace. But when growth is stuck at 2 percent or 3 percent, a major global crisis could stall job creation and raise unemployment.
Beyond Europe, troubles in other areas could also upset the U.S. economy next year, the economists say. Congressional gridlock ahead of the 2012 elections and unforeseen global events, like this year’s Arab Spring protests, could slow the U.S. economy. Three economists said rising nuclear tensions with Iran are a concern.