A panel of leading business economists Monday forecast continued growth for the U.S. economy, and said they do not expect renewed recession. The forecast came from the National Association for Business Economics, known as NABE.
The forecast sees U.S. economic growth for this year at 2.4 percent, rising to 3.2 percent next year.
The group of 32 forecasters, representing mid- and large-size U.S. companies, believes conditions are improving steadily, and that there is no need for the central bank to again cut interest rates. The Federal Reserve cut rates 11 times last year, in order to stimulate a recovery that so far has been sluggish.
Tim O'Neill is the NABE vice-president in charge of the forecast. He says the economy has proven to be exceedingly resilient, and that the September 11th terrorist attacks in the United States last year did not significantly reduce economic activity.
"While the event was horrific in every possible way one can imagine, it didn't directly impede, except for a very short period of time -- economic activity," he said.
Mr. O'Neill, the chief economist at the BMO financial group in Toronto, says the major uncertainty looming over the forecast is the impact of a possible U.S. military strike on Iraq.
"What I certainly don't know, if there is a more potential upward spike in oil prices to come," he said. "If it is sharp and extended, it is potentially an important impact on the economy. If it is short and small and brief, you might actually see oil prices fall, when the uncertainty disappears and the actual invasion happens."
Mr. O'Neill, like other economists, believes most of the recent sharp increase in oil prices [to $30] is due to the expectation of war.
The business economists expect interest rates to begin to rise early next year. They are currently at 40-year lows. They tend to dismiss the likelihood of a renewed recession, and are not particularly worried about the steady and deep declines in world share prices.