NATION Survey: Economists forecast recovery in '03

Government statistics indicate pretax profits in the third quarter were up 12 percent from a year ago.
NEW YORK (AP) -- After two years of cost-cutting, economists expect companies to start using rising profits to rebuild inventories and make capital improvements in 2003, helping to fuel an economic recovery, according to a survey published today.
The Wall Street Journal's 2003 economic-forecast survey of 55 economists indicates that economists generally believe increased corporate spending will contribute to steady economic growth throughout the year.
"Businesses are making higher profits and generating more cash and they have to do something with it," Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, N.Y., told the Journal.
Government data showed that pretax profits in the third quarter of 2002 were up 12 percent from the same period a year earlier.
Looking ahead
On average, the economists forecast that real gross domestic product -- the value of the nation's output, adjusted for inflation -- would grow at an annual rate of 2.7 percent in the first quarter, 3.2 percent in the second quarter and 3.7 percent in the last two quarters of the year.
The economy is expected to have grown by an annual rate of about 1 percent in 2002.
If economic growth falls in line with the experts' predictions, they expect the unemployment rate to fall to 5.7 percent by the end of 2003, from the current rate of about 6 percent.
But the economists also warned about uncertainties in the near future -- such as the possibility of an extended conflict in Iraq or new terrorist activity -- that could hurt economic growth.