WASHINGTON -- The U.S. economy will expand at a robust 3.5 percent annual rate in the second quarter and continue at a solid pace the rest of the year, according to a survey of business economists released Monday.
Still, growth for the full year will likely come in lower than they previously estimated.
The National Association for Business Economics revised its forecast from March, when it projected the economy would grow at a 2.8 percent annual rate in the second quarter.
The group also raised its outlook for the second half of the year.
It now projects 3.1 percent growth in the third quarter, up from 2.9 percent. The year will close out, it said, with the economy expanding at a 3.2 percent annual rate in the fourth quarter, compared with a March estimate of 3.1 percent.
The economy will be "bolstered by activity that was postponed due to adverse weather conditions earlier in the year," said Jack Kleinhenz, the group's president and chief economist at the National Retail Federation.
Still, the worse-than-expected first-quarter economic performance led the association to downgrade its projection for overall growth this year.
The economy now is expected to expand at a 2.5 percent rate for the entire year, down from a 2.8 percent estimate in March.
In the first quarter, lower-than-normal temperatures and heavy snow in much of the nation caused output to contract at a 0.1 percent annual rate, according to the latest Commerce Department estimate.
It was the first time in three years that the economy shrank and only the second such quarterly decline since the recession ended five years ago.
Economists have been expecting a rebound in the March-through-June period.
Recent data, including Friday's report that the economy added 217,000 net new jobs in May, point toward a second-quarter rebound.
The association also upgraded its labor market forecast. It now expects an average monthly growth of 209,000 net new jobs, compared with 188,000 in the March quarterly forecast.
More jobs mean more people earning paychecks, and that can boost spending. Economists are more optimistic about consumer spending this year, which they estimate will grow at a 2.9 percent pace. That would be the highest level since 2006.
Despite the downgrade in annual economic output, the growth for this year would be better than last year's 1.9 percent rate. Because of that, more business economists said they expect the Federal Reserve to start raising its rock-bottom short-term interest rates next year.
The Fed has kept rates close to zero since late 2008 to try to stimulate economic growth.
About 86 percent of respondents to the group's survey predicted that the Fed would begin increasing rates next year, compared with 53 percent in March.
The group's survey is slightly more pessimistic than the Fed's most recent projections, released in March. The Fed expects growth will be between 2.8 percent and 3 percent this year. The Fed may lower its growth outlook for this year when it releases its next forecasts later this month because of the first quarter's contraction.
Information for this article was contributed by Christopher S. Rugaber of The Associated Press.
Business on 06/10/2014