The latest NABE Outlook Survey shows improved expectations for the economy. The data are based on the consensus of macroeconomic forecasts from a panel of 54 professional forecasters and they cover the outlook for 2012 and 2013. In the introduction of the forecast:

“Economists responding to the latest NABE Outlook Survey expect moderate growth in the near-term with improvement coming in the post-election year,” said NABE Outlook Survey Chair Shawn DuBravac, chief economist at the Consumer Electronics Association.

Almost all key indicators, particularly housing and unemployment, will improve, but not really by much, if the numbers are taken one by one. Monthly jobs added are expected to be 188,000 for nonfarm payrolls. This is up from 170,000 in the forecast done a quarter ago. In 2012, housing starts are expect to move up 18% to 720,000 and then to 850,000 in 2013. None of these numbers, if reached, would be enough to drive the U.S. economy higher quickly.

Low Gas Prices

Gasoline prices reached a three-month low, according to the carefully watched Lundberg Survey. Prices nationwide for regular fell to $3.7833 for the two weeks that ended May 19. This represents a drop of 6.1 cents from the two weeks prior. The data are based on a canvassing of 2,500 stations. Lundberg reports that prices peaked in the two weeks that ended April 6, when they were only four pennies short of $4. AAA Fuel Gauge data supports Lundberg. It showed yesterday’s price for regular gas based on the nationwide average at $3.689, down from $3.727 a week ago and $3.871 a month ago. The national average for a gallon of premium finally has dropped below $4 to $3.991, AAA reports. As the summer driving season begins next weekend, prices were supposed to rise. But WTI crude is below $92 and falling. Less than three months ago, the price was higher by more than $10. Based on anecdotal evidence, oil demand from China has fallen. Of course, the recession in Europe has killed oil demand as well.

Whither the Dow?

The DJIA starts the week at 12,269.38. Plenty of forecasters believe it will fall to 11,000 long before its makes it back to 14,000. The index is down 7% in less than two months. The so-called headwinds against stocks number at least three. The most obvious is trouble in Europe. The recession there not only will hurt the demand for goods and services from U.S. companies, there could be bank balance sheet fallout for some American financial firms, if Greece defaults. China’s economy also has hit a snag, making it another region where demand for U.S. products likely will falter. Last, key data about the U.S. economy has been relatively poor. The number of jobs added per month has dropped well below the 200,000 pace set earlier this year. Housing starts have improved somewhat, but home prices have not. If there will be any stimulus added to the economy by the federal government, it will not be until after the election — which means next year. And both individuals and companies are uncertain about what their tax status will be. Congress could decide to allow relatively low tax rates, which have been in place since the Bush administration, to expire.

Insider Trading Trial

Rajat K. Gupta, a former head of McKinsey & Co. and director of Goldman Sachs (NYSE: GS), will go on trial for insider trading. He will sit in federal district court today and hear the charges against him read. Gupta allegedly gave Raj Rajaratnam, former head of the Galleon Group hedge fund, confidential information about two companies. The information helped create $63 million in illegal trading profits. Much of the evidence presented will be based on phone bills that show Gupta’s calls, during which he may have talked about the confidential matters. Other evidence is based on his trading records. A number of legal experts do not think there are enough smoking guns to show Gupta’s guilt. U.S. prosecution of insider trading would be badly hurt if a prized target like Gupta gets off.

Douglas A. McIntyre

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