Scrambling to keep up with surprisingly strong economic news, private forecasters have boosted projections of U.S. economic growth, a closely watched newsletter said Monday.
Blue chip economic indicators said its poll of over 50 professional forecasters found the consensus view for 2004 growth had risen to 4.2 percent from the 3.9 percent expected only a month ago.
At the same time, economists nudged up forecasts for the fourth quarter of this year as well, with expectations now centered on growth at a 3.8 percent annual rate.
Forecasters now expect the economy to expand 2.9 percent this year, a couple notches higher than thought a month ago.
The ramping up of private forecasts comes in the wake of a government report a little over a week ago that showed the U.S. economy rocketed ahead at a 7.2 percent annual pace in the third quarter, the best showing in nearly two decades.
However, the Blue Chip survey was conducted early last week, before the government reported a steeper-than-expected climb of 126,000 in October payroll employment, coupled with upward revisions to prior months’ data.
The government also said the nation’s jobless rate fell to 6.0 percent last month from 6.1 percent in September.
In addition, initial claims for jobless benefits fell in the week ended Nov. 1 to their lowest level since before the 2001 recession.
“Recent data strongly hints that accelerating aggregate demand and growing business confidence has produced a pick up in hiring that may be even more evident in the November employment report,” the Blue Chip newsletter said.
But when Blue Chip conducted the survey, analysts said progress whittling away at the nation’s jobless rate was expected to be slow, despite rising optimism on growth.
The consensus among the panel was for an average unemployment rate of 5.9 percent in 2004, a view that has held steady since August.
Over half of the respondents told the newsletter they believed the Federal Reserve would begin raising overnight borrowing costs, which are currently at a 1958 low of 1 percent, before July of next year. The consensus forecast was for rates to reach 1.78 percent by the end of 2004.