U.S. securities industry economists continue to expect modest economic growth and high unemployment to prevail over the next couple of years.
The Securities Industry and Financial Markets Association (SIFMA)’s Economic Advisory Roundtable released its outlook for the second half of 2013 and predictions for 2014 today, forecasting that the economy will grow 1.7% this year and 2.6% in 2014.
Unemployment was expected to remain at elevated levels throughout 2013 and 2014, with the full-year average unemployment rate forecast to decline to 7.5% in 2013, from the end-year 2012 forecast of 7.7%, on the way to 6.9% in 2014.
“Our roundtable maintains their forecast for moderate economic growth for 2013 and 2014, with upside and downside drivers varied among respondents,” said Kyle Brandon, managing director and director of research at SIFMA. “Generally, the continued housing recovery and low energy prices were seen as positive drivers of growth, while external factors such as Europe and emerging markets featured as the downside risks to the economy.”
SIFMA also reports that 75% of respondents expect the U.S. Federal Reserve Board to reduce the pace of securities purchases as early as September 2013, with the remainder expecting a reduction to start sometime in the fourth quarter, or at the latest, January 2014. More than half expect the Fed to completely end these purchases in the second quarter of 2014, slightly less than a third expect them to end in the first quarter of 2014, and the balance expect it in the third quarter of 2014.
Respondents were almost unanimous in their opinion that debt ceiling negotiations would not impact GDP in a meaningful way in 2013, SIFMA notes, adding that one economist says that a fiscal deal is likely to be reached without a government shutdown or “excessive brinksmanship.” Another noted that the deficit was shrinking “rapidly” and that, in fact, the resulting increase in revenues as a percentage of GDP “could result in considerable, unexpected fiscal drag in 2014.”