U.S. economic growth is set to rebound strongly in the second quarter as the scars of a brutally cold winter fade, but inflation pressures will remain tame through 2015, according to the Organization for Economic Cooperation and Development.
In its latest economic outlook published on Tuesday, the OECD forecast U.S. gross domestic product expanding at a 3.9% annual pace this quarter, and it said it expects growth to maintain a brisk pace for the remainder of the year as well.
An unusually cold and snowy winter held down GDP growth to a 0.1% rate in the January-March period, the government said in an initial estimate last week, and that figure already looks overstated.
Data on construction spending and factory inventories for March that have come in since the GDP report was released have proven weaker than the government had assumed, suggesting the economy likely contracted.
Growth is expected to average 2.6% this year and quicken to 3.5% in 2015, the OECD said, as gains in asset prices boost household wealth and the drag from fiscal policy continues to lighten. Growth averaged 1.9% last year.
The OECD said the risk to its bullish growth forecasts was that business investment would rebound less vigorously than projected if firms' growth expectations faltered.
Despite the anticipated growth acceleration, inflation pressures are likely to remain benign, given sluggish wage growth. The unemployment rate is forecast averaging 6.5% this year, down substantially from 7.4% in 2013.
Related Stories
