NABE panelists downbeat about job growth

July 16, 2012 at 1:50 AM
share with facebook
share with twitter

ARLINGTON, Va., July 16 (UPI) -- Prospects for U.S. jobs growth appear worse than three months ago amid fears the economy is souring, a survey of economists and policymakers indicated Monday.

About 23 percent of National Association for Business Economics panelists said in a July survey they thought U.S. employment would rise over the next six months, down from the 39 percent who expressed this view in April and 27 percent in January.

Forty-three percent said they held this view in July 2011.

The downbeat job-growth forecast follows last week's release of minutes from a June 19-20 Federal Reserve meeting in which officials agreed unemployment would remain elevated for another five to six years.

The economy added 80,000 jobs in June and the unemployment rate remained at 8.2 percent, the U.S. Labor Department said July 6.

The NABE survey forecast also follows a report from the Economic Cycle Research Institute, a New York-based independent forecasting group, that said an economic contraction was imminent.

"We have not seen a slowdown where year-over-year payroll job growth has dropped this low without a recession," the institute said in a May report that its co-founder reiterated Tuesday -- although the institute said Friday an economic-growth indicator rose to an eight-week high and annualized growth rose to a five-week high.

The NABE survey results also "suggest worsening economic conditions through increased flatness in sales and profit margins, ... weakening optimism concerning real [gross domestic product] growth and rising concerns about the impact of the European crisis," although U.S. inflation is unlikely, association member and National Defense University industry and business Professor Nayantara Hensel said in a statement.

Real GDP is the value of all goods and services produced in the United States in a given year, adjusted for inflation. GDP is the single most comprehensive indicator of the economy's health.

NABE panelists also expressed concerns about a sales downturn if Bush-era tax cuts expire in December and automatic government spending cuts take place in January.

Sixty-five percent said they expected sales would fall under this scenario, while 30 percent said they expected sales would stay the same.

Under current law, the end of the year will bring about federal tax increases as U.S. tax cuts originally passed during the presidency of George W. Bush expire, along with temporary payroll tax reductions.

The government is also scheduled to cut federal spending starting in January because of measures set in motion by Congress' inability last December to come up with plans for long-term fiscal restructuring.

In addition to those components of the so-called fiscal cliff, a federal extension for unemployment benefits ends this year, meaning newly unemployed workers in most states will receive no more than 26 weeks of jobless benefits, the National Employment Law Project says.

Without extended jobless benefits, unemployed workers will have less disposable income, cutting their spending -- and reducing employers' need to hire more workers, The New York Times says.

Fifty-six percent of NABE panelists forecast real GDP would grow 2.1 percent to 3 percent from this year's second quarter to next year's. Five percent forecast real GDP growth would top 3 percent.

Forty percent forecast GDP growth would be 2 percent or less and 11 percent said it would be 1 percent or less.

The July industry survey of 67 NABE members was conducted June 14-26.

Related UPI Stories
Trending Stories