WASHINGTON, Oct 15 (Reuters) – Economists at big banks and
companies predict the U.S. economy will grow faster in 2013, but
a poll on Monday showed their forecasts have a big caveat. Most
believe Congress will steer away from sharp tax hikes and
spending cuts.
The U.S. economy will likely expand 2.4 percent next year,
up from projected growth of 1.9 percent in 2012, according to
the survey of 44 forecasters made by the National Association
for Business Economics.
Some businesses worry the U.S. government could trigger a
recession by pushing the economy over what Washington is calling
a “fiscal cliff” — about $500 billion worth of tax increases
and over $100 billion in government spending cuts due to start
on Jan. 2.
But the forecasters surveyed by the NABE – who included
economists at Ford, Dupont, and JPMorgan – think most of the
fiscal cliff dangers will be avoided, sparing the economy from
much of the potential damage.
Some 55 percent of respondents think tax cuts enacted under
former President George W. Bush will be extended for all
taxpayers in 2013, rather than expiring at the end of this year.
Another 36 percent expect those lower tax rates will be
extended for lower-income individuals but not for those with
higher incomes.
Also, about four-fifths of the economists polled predict
that planned spending cuts will be greatly watered down.
The NABE survey was carried out between Sept. 14 and Sept.
26.
The predictions gathered by the NABE stand in contrast to a
scenario outlined by congressional analysts who have tried to
project what running off the fiscal cliff would do to the
economy.
The Congressional Budget Office said in August that such
severe belt tightening would cause a 0.5 percent contraction in
gross domestic product next year, likely triggering a recession.
(Reporting by Jason Lange; Editing by Andrea Ricci)
