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Business Title: Business Spending to Power Expansion as Jobs Gain, Survey Says Feb. 22 (Bloomberg) -- Corporate investment will contribute to stronger growth in the U.S. and the economy will start to add jobs early this year, a survey of business economists showed. Spending on equipment and software by companies is expected to increase 7.2 percent this year, up from the November survey’s projection for a 4.2 percent gain, according to the median estimate of 48 economists surveyed by the National Association for Business Economics. Purchases will rise even more next year, jumping 8.6 percent. Corporate spending will help drive economic growth of 3.1 percent this year and 3.2 percent in 2011, economists said. That will help make up for weakness in consumer spending, which accounts for about 70 percent of the economy, as the nation pulls out of the worst recession since the 1930s. “Business investment is growing faster than the rest of the economy,” said Richard DeKaser, chief economist at Woodley Park Research in Washington, who helped conduct an analysis of the NABE survey. “We find inventories to be quite lean now, so businesses are going to be restocking throughout the course of this year and next.” Payroll increases will average 50,000 a month from January through March. Economists in the survey also said stock prices will increase through 2011. The U.S. economy expanded 5.7 percent in the last three months of 2009, the most in six years, the Commerce Department said Jan. 29. Business investment increased at a 13 percent pace, the most since 2006, according to the report. January Employment Payrolls unexpectedly dropped by 20,000 in January, while the unemployment rate fell to 9.7 percent from 10 percent the previous month, according to Labor Department figures released on Feb. 5. The U.S. has lost 8.4 million jobs since the recession began in December 2007. A weak labor market will restrain consumer spending. Purchases are forecast to increase 2.2 percent this year before gaining 2.8 percent in 2011. Personal spending grew at a 2 percent annual pace from October through December of last year. Economists surveyed anticipate the Federal Reserve will begin to raise the federal funds rate in September. Fed policy makers last month said economic conditions are likely to warrant “exceptionally low” levels of the rate “for an extended period.” S&P 500 Forecast The Standard & Poor’s 500 Index will probably end the year at 1,200 and finish 2011 at 1,325, economists said. The report said no forecasters predicted a decline in stock market values during the next two years. Seventy percent of respondents said they expect banks will ease lending restrictions this year, the report showed. The remaining 30 percent said credit will remain tight due to “regulatory guidance, capital pressures and a general climate of risk aversion.” The survey was conducted from Jan. 22 through Feb. 4.
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