Better data and a brightening outlook have Wall Street economists increasing their forecasts even though the official committee that dates recessions said in a statement Monday they are reluctant to declare the downturn over.
Phrases like “green shoots,” “animal spirits” and “real consumer spending” are dominating some economists' weekend reports as they track recovery. Yet, economists with National Bureau of Economic Research won't say the recession is over, even though they tracked growth in 2009 and project more this year.
The National Bureau’s economists expect a 2.9 percent growth in the first quarter with a slight acceleration this quarter to 3.4 percent. They tracked 5.5 percent growth in the fourth quarter of 2009.
Meanwhile, economists are taking a rosier view of the economy. “Real consumer spending continues to outrun our projections,” wrote Goldman Sachs economists wrote in its weekend report. The result is that consumers are putting funds into home renovations again—effectively using it as the equivalent of savings.
In its report, Nomura’s David Resler wrote that movement upward, or new “green shoots,” of spring are reflecting a rebound. And both UBS and Morgan Stanley raised their growth forecasts for this quarter by a half a point. UBS, quoting the 20th-century economist John Maynard Keyes, wrote that “animal spirits” spur higher growth and reported a 0.3 percentage points upturn for the second quarter. UBS said that its upgrade is largely because of rising CEO confidence, reflecting better than expected earnings, that will yield more consumer spending and more hiring.
Of course, the economy is not without challenges. Oil prices remain a concern: The prices could cap the rebound, but not at the current prices. And there remain sluggish spending at the state level and a high employment rate that’s slow to come down.