Economic forecast has improved in past several months

The economy continues to face challenges —  the economy will grow 2.4 percent in 2012, improving in the second half of the year. 

On the employment front, the 45 economists asked estimate that the economy will add about 170,000 this year, leading to an average annual unemployment rate of 8.3 percent, which is where it stood in January after employers added 243,000 jobs.  

That forecast is in line with other economists who aren't predicting any major improvement in the job market this year. Mark Zandi, chief economist at Moody's Analytics, said recently that the jobless rate could fall below 8 percent this year. 

NABE forecasters expect stronger job growth in 2013 with the unemployment rate falling to 7.8 percent.

Meanwhile, economists are still concerned about levels of consumer spending, which account for about 70 percent of economic activity, and could remain subdued this year because of economic uncertainty. 

Real consumer spending is expected to increase 2.1 percent this year and 2.3 percent in 2013. This rate remains below the historical norm of 2.8 percent and is consistent with a positive but slugglish recovery. 

Consumers are expected to spend on cars with vehicle sales expected to expand to 14 million car this year and 14.6 million in 2013, up from 12.7 million in 2011. 

The auto industry and the bailout money it received in 2008 and 2009 has been a focus of comments made by President Obama as he campaigns for re-election. 

The housing market still remains a concern with gradual improvement expected this year, accelerating into 2013. 

Housing starts are expected to increase 19 percent, reaching 700,000 units this year, up from 610,000 in 2011 and an upward revision from the November forecast. 

The forecast for 2013 shows continued improvement, with housing starts reaching 850,000 units. 

Also, real residential investment is expected to increase 6.6 percent in 2012, slightly higher than the 4.3 percent predicted in November, and then strengthen further, rising 10 percent in 2013. 

The projection for home prices this year was lowered slightly from a projected increase in the November survey to home prices remaining unchanged in the February survey. In 2013, home prices are expected to increase slightly more than 2 percent.

An increase in business spending could push the economic recovery along, as well. 

The outlook for spending on real nonresidential equipment and software this year was slightly revised upward to 8.1 percent, and a lower but still solid 7.3 percent next year. 

Industrial production is expected to increase moderately at 3.5 percent this year and at 3.3 percent in 2013.

Respondents are less bullish on exports for 2012, lowering their projections from a 6.1 percent growth rate in the November 2011 survey) to 4.6 percent in the February. 

The projection for import growth in was also lowered, from 4.3 percent to 3.5 percent. 

Exports and imports in 2013 are projected to grow 7 percent and 5.3 percent, respectively. 

The survey also forecast: 

• Federal budget deficits are expected to gradually decline, but not before another trillion-dollar deficit in 2012. In 2013, the deficit is expected to shrink to $876 billion from a projected $1.1 trillion this year. 

• Inflation will hover just under 2 percent, the consumer price index will be somewhat higher, mostly due to higher energy prices. 

• The federal funds rate will remain unchanged and near zero. The 10-year Treasury yield will advance to 3 percent by year-end 2013.

• After-tax corporate profits are projected to rise 6.3 percent this year and 7 percent next year.

• Equity markets are expected to grow moderately in 2012 and rise again in 2013. The stock market’s sharp rise in recent weeks is expected to decelerate, with the S&P 500 Index reaching 1,400 in 2012 and 1,500 next year.