Moody's Mark Zandi: Economy Will Grow 3 Percent This Year

Friday, 31 Jan 2014 08:17 AM

By Dan Weil

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U.S. economic growth will accelerate to 3 percent this year from last year's tepid 1.9 percent showing, predicts Mark Zandi, chief economist at Moody's Analytics.

"Broadly speaking the economy is performing steadily better: 2014 should be a meaningfully better year than 2013," he told Yahoo. And he sees 4 percent growth next year.

The stronger economy will boost hiring Zandi says. He expects payrolls to rise 2.75 million this year, up from 2.25 million in each of the past two years. That number will advance to well over 3 million in 2015, Zandi says.

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"The job market is headed in right direction."

The economic growth path will lead the Federal Reserve to finish its quantitative easing late this year, and the central bank will begin to raise interest rates in the summer or fall of 2015, Zandi says.

He says a slowdown in the housing market may present the biggest risk to his forecast. "We need to see more home sales, more housing construction," Zandi said.

"Housing is very interest rate sensitive. If rates rise too far too fast, it short-circuits the housing recovery. Then we won't get the economic growth I am anticipating."

Some other experts expressed optimism about the economy too after Thursday's news of a 3.2 percent gain in fourth-quarter GDP. "There is a fair amount of strength in the economy,” Nariman Behravesh, chief economist at IHS, told Bloomberg.

"Consumer spending is on solid ground. We’re seeing other engines of growth picking up — capital spending is rebounding, exports are up."

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