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Still, a panel of 40 top forecasters with the National Association for Business Economics isn't expecting significant improvement over the next two years. Last week, they predicted GDP growth of just 2.2 percent in 2013. One problem is that companies are holding off on purchases of computers, industrial equipment and other long-lasting manufactured goods. Corporate spending has been lackluster for four straight months. Corporate investment helped the U.S. economy emerge from the Great Recession. But businesses have grown more cautious since spring, in part because customer demand has remained modest and exports have declined as the global economy has slowed. Many companies worry that their overseas sales could dampen further if recession spreads throughout Europe and growth slows further in China, India and other developing countries. Businesses also fear the tax increases and government spending cuts that will kick in next year if Congress doesn't reach a budget deal. Business investment has slumped even as consumers have become more hopeful about the economy. Consumer confidence in October reached a five-year high. Retail spending surged in September, mainly because Americans bought more cars, iPhones and appliances. And home sales are up this year, contributing to a nascent housing recovery. Consumer spending drives nearly 70 percent of economic activity. Housing is rebounding after a six-year slump. New-home sales jumped last month to the highest annual pace in 2 1/2 years. And in September, builders broke ground on homes and apartments at the fastest pace in more than four years. This year will likely be the first time in six years that housing has contributed to economic growth.
[Associated
Press;
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