“The National Association for Business Economics (NABE) panel forecasts a gradual acceleration in economic expansion, from a 2.3% rate of growth in inflation-adjusted gross domestic product in the third quarter of 2013 to 3.0% in the spring through the autumn quarters of 2014,” said Dr. Nayantara Hensel, chair of the NABE Outlook Survey.

• The NABE panel forecasts a gradual acceleration in economic expansion, from a 2.3% rate of growth in inflation-adjusted gross domestic product (GDP) in the third quarter of 2013 to 3.0% in the spring through the autumn quarters of 2014. Inflation-adjusted GDP is estimated to grow from the fourth quarter of 2012 to the fourth quarter of 2013 at 1.9%, which is an increase from 1.7% in 2012. The growth rate is estimated to increase to 3% in 2014. Nevertheless, the panelists have reduced their estimate of real GDP growth between the fourth quarter of 2012 and the fourth quarter of 2013 from the last survey, when they predicted 2.4% growth, rather than the 1.9% in the current survey. On a quarterly basis, the panelists foresee real GDP growth rising from a 2.3% annual rate in the third quarter of 2013 to 2.6% in the fourth quarter, 2.8% in the first quarter of 2014, and 3.0% in the remaining quarters of 2014.

• The panelists suggest that there is an 80% probability that the Federal Reserve will reduce its asset purchase program in 2014. Regarding 2013, the panelists believe that there is a 45% probability that the Fed will reduce both the monthly purchases of $40 billion in mortgage-backed securities and the monthly purchases of $45 billion in Treasurys and a 19% probability that these monthly purchases of Treasurys and mortgage-backed securities will not be reduced. They believe that there is a 20% probability that the asset purchases of the $45 billion in Treasurys will be reduced, with no change in the monthly purchases of the mortgage-backed securities; and a 15% probability that the asset purchase of mortgage-backed securities will be reduced, but that the purchases of Treasurys will be unchanged.

• About 46% of the panelists believe that this year’s cuts in federal spending (sequestration) will reduce the growth rate of real GDP for the fourth quarter of 2013 by half a percentage point or less. Indeed, 30% of the panelists believe that the growth rate of real GDP in the fourth quarter will be reduced by between 0.2 and 0.5 percentage points. About 16% of the panelists believe that the cut in federal spending will reduce the growth rate of real GDP by more than 0.5 percentage points and less than one percentage point. Only 9% of the panelists believe that the cuts in federal spending will increase the growth rate of real GDP by less than 0.2 percentage points and only 5% of the panelists believe that the federal spending cuts will increase the growth rate in real GDP by more than 0.5 percentage points and less than one percentage point.