The U.S. economy will grow 4.7 percent this year, according to an influential poll of economists released on Thursday, which also said soaring energy prices have begun to feed into forecasts for inflation.
The latest monthly Blue Chip Economic Indicators poll, closely watched by U.S. policymakers, raised its gross domestic product forecast slightly from 4.6 percent in February.
The 2005 estimate was lifted by the same amount to 3.8 percent, with economists confident that domestic demand will continue to support the economy as the drag from net exports fades, thanks in part to the weaker dollar.
"The consensus forecast of above-trend real GDP growth throughout this year and next is primarily based on the twin assumptions that consumer spending will stay relatively solid while the strong rebound in business investment that began last year continues to gather momentum," the survey said.
The poll, often cited by the Federal Reserve as a benchmark of market expectations, saw strong gains in real disposable income in 2004 anchoring a 3.7 percent rise in personal consumption expenditure — which accounts for the bulk of GDP.
But it cautioned this optimism stemmed from economists' assumptions about large tax refunds which had not yet materialized, plus faith that the jobs market will improve.
The country's February payrolls employment fell well below expectations with just 21,000 new jobs added. Wall Street had expected a number around 125,000.
The Fed says strong growth will eventually generate more job creation once gains in productivity fade. But successive months of weak employment data risk upsetting consumer confidence and could sap strong household spending.
The Blue Chip poll also highlighted concerns over rising energy prices, with U.S. light crude oil this month touching a post-Iraq war peak above $36 per barrel.
Economists' consensus estimates for the overall consumer price index (CPI) jumped to an annualized 2.6 percent for the first quarter and were raised by 0.2 percentage points to 1.8 percent for 2004 as a whole.
In the fourth quarter, CPI was expected to have edged up to 2.0 percent on an annualized basis, up from 1.9 percent forecast last month.
"If gasoline prices continue to rise as we move into the summer driving season, forecasters will undoubtedly continue to raise their forecasts of overall inflation," it said.
