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Fifty-five percent of the economists surveyed said they think the so-called Bush tax cuts will be held in place for another year for all income levels, while another 36 percent believe they will be extended only for lower income brackets. And 77 percent of the panelists said they think the automatic spending cuts will be greatly diminished by subsequent legislation. The economists also forecast that: Inflation will remain low next year. The Federal Reserve's preferred measure is seen rising 1.9 percent in 2013 while the core Consumer Price Index, which includes spending on everything except food and energy, is projected to increase 2.2 percent. Consumer spending will be weak. The panel revised its forecast for growth in consumer spending downward to 1.9 percent in 2012 and 2 percent in 2013, reflecting slow personal income growth and limited job gains. Longer-term interest rates should rise. The yield on the 10-year Treasury note, now 1.66 percent, is forecast to climb steadily to 2.3 percent during the fourth quarter of 2013 as the Fed draws nearer to reversing its policy of extraordinarily low short-term rates. Stocks will rise modestly. The Standard & Poor's 500 index is predicted to be 1,450 at year end and 1,520, or 5 percent higher at the end of 2013. The key market barometer is currently 1,429.
Corporate profit growth will show moderate but less-than-average increases. After-tax corporate profits are projected to rise 7 percent this year and 5 percent next year, below the 10.2 percent average of the last 20 years.
[Associated
Press;
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