The U.S. economy is poised to gain 2.5% this year, up from a weak 1.7% in 2011, says the Conference Board of Canada’s U.S. Outlook-Spring 2012.
“Last year, the U.S. economy appeared ready to take off, only to slump over the summer months,” says Kip Beckman, principal economist. “Fortunately, there are some major differences between 2011 and 2012 that will enable the U.S. to avoid another slowdown.”
Both business and household sentiments are at higher than 2011. The European Central Bank has also sent signals to global markets that the continent’s banks won’t fail and that the Eurozone’s sovereign debt crisis won’t drastically affect the U.S. economy.
During three straight months, the U.S. economy generated more than 200,000 jobs through February. While that number fell back to 120,000 in March, the current 8.2% unemployment rate remains 1.8% lower than the 10% recessional high. The Conference Board estimates that will drop below 8% by year’s end.
Gas prices continue to threaten the U.S. economy—if they stay below $4 per gallon, improving job markets should help them absorb increased costs. If tensions over Iran’s nuclear program erupt, oil prices could easily climb to $150 per barrel, sending gas prices above $5 per gallon.
The Conference Board forecasts this will be avoided and predicts the U.S. economy will stay on track to grow 3% in 2013.