U.S. Economy Expected to Surge in Early 2006

The U.S. economy is expected to expand robustly in the first quarter according to a survey by the National Association for Business Economics (NABE).

"The NABE panel sees the economy roaring back in early 2006 following the fourth quarter's tepid 1.1% growth," said Stuart Hoffman, NABE president and chief economist at PNC Financial Services Group. "Our forecasters expect the economy to shake off the effects of last year's hurricanes and surging oil prices, and project strong real GDP growth of 4.5% in the first quarter, which would be the fastest quarter growth since the third quarter of 2003."

"For all of 2006, the panel expects GDP growth of 3.3%," stated Hoffman. "This growth is expected to be enough to prompt two more quarter-point Fed funds rate increases to 5%. In the first NABE panel forecast for 2007, GDP growth slips to 3.1%, and the Fed eases rates."

High and rising energy costs are seen as the biggest risk to this expansion in early 2006. But despite these risks, the expansion is not expected to end anytime soon. 

The NABE panel expects payroll employment growth of 1.6% (2.1 million jobs) in 2006 and 1.3% (1.8 million jobs) in 2007.