WASHINGTON — The U.S. economy is improving faster than economists had expected. They now foresee slightly stronger growth and hiring than they did two months ago — trends that would help President Barack Obama’s re-election hopes.
Those are among the findings of an Associated Press survey late last month of leading economists. The economists think the unemployment rate will fall from its current 8.3 percent to 8 percent by Election Day. That’s better than their 8.4 percent estimate when surveyed in late December.
By the end of 2013, they predict unemployment will drop to 7.4 percent, down from their earlier estimate of 7.8 percent, according to the AP Economy Survey.
“The economy is finally starting to gain some steam, with consumers and businesses more optimistic about prospects in 2012,” said Chad Moutray, chief economist at the National Association of Manufacturers.
The AP survey collected the views of two dozen private, corporate and academic economists on a range of indicators. Among their forecasts:
• Americans will save gradually less and borrow more, reversing a shift toward frugality that followed the financial crisis and the start of the Great Recession.
• Obama deserves little or no credit for declining unemployment. Only one of the 19 economists who answered the question said Obama should get “a lot” of credit. They give most of the credit to U.S. consumers, who account for about 70 percent of economic activity, and businesses.
• The economy has begun a self-sustaining period in which job growth is fueling more consumer spending, which should lead to further hiring.
• The economy will grow 2.5 percent this year, up from the economists’ earlier forecast of 2.4 percent. In 2011, the economy grew 1.7 percent.
The brighter outlook for jobs follows five straight months of declining unemployment. Employers added more than 200,000 net jobs in both December and January. The unemployment rate is
the lowest in nearly three years.
“Manufacturers are relatively upbeat about production this year,” Moutray said. That will require expanding factories and buying more machinery. “All that plays into a better year than some people might have been expecting.”
