These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:
Despite the recent $150 billion tax increase, uncertainties imposed by sequestration and halting growth in consuming spending, economists expect GDP growth to rebound and moderate jobs creation to continue.
Friday, forecasters expect the Labor Department to report the economy added 171,000 jobs in February, and for unemployment to remain unacceptably high for several more years.
In the fourth quarter, GDP was up at a scant 0.1 percent annual pace, slowed by a drop in inventory build and smaller Pentagon purchases. However, those factors are not likely to repeat in the first-quarter data, and the effects of sequestration will not likely be felt until spring.
Consumers have been constrained by higher gas prices and the January tax increases, but overall, economists expect GDP growth to be in the range of 2 percent or a bit higher in the first quarter.
Still, the pace of recovery remains disappointing, in part, because Dodd-Frank regulations make mortgages, refinancing and home-improvement loans much more difficult to obtain. Those hold down existing homes sales, renovations and demand for building materials, major appliances and other durable goods. Continue reading…