WASHINGTON — The U.S. economy will expand at a robust 3.5% 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.
The National Assn. for Business Economics revised its forecast from March when it projected the economy would grow at a 2.8% annual rate in the second quarter.
FOR THE RECORD
June 9, 1:03 p.m.: An earlier version of this post stated that economists have been expecting a rebound in the March-through-June period. The second quarter runs from April through June.
The group also boosted its outlook for the second half of the year.
It now projects 3.1% growth in the third quarter, up from 2.9%. The year will close out, it said, with the economy expanding at a 3.2% annual rate in the fourth quarter, compared with a March estimate of 3.1%.
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 business economists organization to downgrade its projection for overall growth this year.
The economy now is expected to expand at a 2.5% rate for the entire year, down from a 2.8% estimate in March.
In the first quarter, colder than normal temperatures and heavy snow in much of the nation caused output to contract at a 0.1% 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 Great Recession ended five years ago.
Economists have been expecting a rebound in the April-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 business economics group 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.
Despite the downgrade in annual economic output, the growth for this year would be better than last year's 1.9% 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 at near zero since late 2008 to try to stimulate economic growth.
About 86% of respondents to the group's survey predicted that the Fed would begin increasing rates next year, compared with 53% in March.