Sept. 10 (Bloomberg) -- The U.S. economy will grow 2.6 percent this year, underpinned by a burst of spending in the current quarter, a private survey of economists showed. For the first time since February, economists forecast growth this year will outpace that of 2002, according to the consensus estimate of 54 economists surveyed by Blue Chip Economic Indicators. The economy grew 2.3 percent in 2002. Gross domestic product will rise at a 4.5 percent annual rate in the current quarter, the strongest pace since the first three months of 2002, after growing at a 3.1 percent rate from April through May, according to the consensus.
``Stronger consumer spending is central to the growing optimism about the pace of GDP growth,'' the report said. Personal spending, which accounts for more than two-thirds of the economy, is expected to rise at a 4.4 percent annual pace this quarter after growing at a 3.8 percent rate in the previous three months, the survey showed. Economists last month forecast a 3.1 percent increase in consumer spending this quarter. ``The acceleration in consumer demand likely results from the earlier home refinancing boom and a response to the federal tax cut that went into effect on July 1,'' the report said.
The results of the Blue Chip survey are the same as the findings of a Bloomberg News survey of 59 economists polled between Aug. 28 and yesterday. The polls sample different groups of economists. They overlap on some. The economy is expected to expand at a 3.9 percent annual pace in the last three months of 2003, 0.1 percentage point faster than projected last month, the Blue Chip report showed.
2004 GDP will expand 3.9 percent for all of 2004, the most since 1999 and up from the 3.7 percent August forecast, according to the survey. An improvement in business investment in new factories, equipment and software will supplement the rise in consumer spending and help sustain the pace of growth into 2004, the report showed. Corporate spending will probably rise 8.2 percent next year, the biggest increase since 1998, after growing 2.1 percent this year, according to the forecasts. Those surveyed were optimistic that the recent increase in interest rates isn't enough to squelch either personal or business spending. The rate on the Treasury's 10-year note, the benchmark for other interest rates such as 30-year fixed mortgages, would have to rise to 5.83 percent before it started to restrain growth, according to the results of a special question. The rate was 4.36 percent yesterday. It reached a closing low of 3.11 percent in mid June, the lowest in 45 years.
Federal Reserve policy makers are expected to raise the target for the overnight bank lending rate to 1.92 percent by the end of 2004, almost double the current 1 percent target rate that is the lowest since 1958, according to the consensus.//www.bloomberg.com