WASHINGTON, DC—“The US economy is currently as strong as it hasever been in this recovery,” writes Kevin Thorpe,chief economist with Cassidy Turley, citing anaccelerating economy and the first signs of wage growth. “With theharsh winter behind us, many indicators are revving up again andfollowing the accelerating pattern we observed in the latter halfof 2013.”

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Thorpe's report, which projects economic metrics for the nextfive quarters, projects real GDP growth of at least 3% per quarterthrough mid-2015, along with quarterly growth in office-usingemployment exceeding Q1's total of 145,000 jobs added nationwide.It also projects the Institute for SupplyManagement's Manufacturing Index to exceed 54.0 duringthose quarters.

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That assessment squares with ISM's own long-term view. In asurvey also released on Tuesday, ISM said 68% of respondents fromits panel of manufacturing supply management executives predictedtheir revenues would be 9.1% greater in 2014 compared to last year,9% expected a 9.6% and 23% anticipated no change. “This yields anoverall average expectation of 5.3% percent revenue growth amongmanufacturers in 2014, which is a notable increase” of 0.9percentage points in expectations compared to this past December,according to ISM.

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Further, Thorpe reports, “The March data revealed huge reboundsin vehicle sales, retail sales, manufacturing output and employmentgains, and consensus forecasts show that healthy growth is expectedto continue for the rest of 2014, with annual GDP growth stillexpected to reach 3%.” The forecast reflects economic conditionsthrough the end of the first quarter and therefore does not includeApril's stronger-than-expected Bureau of LaborStatistics report of 288,000 jobs added to the domesticeconomy during the month.

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In the non-manufacturing sector, the ISM forecast is slightlyless positive, although positive nonetheless. “Fifty-one percent ofnon-manufacturing purchasing and supply executives expect their2014 revenues to be greater by 6.7%” than they achieved last year,according to the Temope, AZ-based association. “Overall,respondents currently expect a 2.7% net increase in overallrevenues, which is less than the 3.6% increase that was forecast inDecember 2013,” ISM states.

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"Non-manufacturing will continue to grow for the balance of2014,” says Anthony Nieves, chair of thenon-manufacturing committee at ISM. He adds that non-manufacturingcompanies “continue to operate very efficiently as reflected by thehigh percentage of capacity utilization."

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Despite the volatility in energy and fuel costs, "supplymanagers have indicated that overall costs have not beensubstantially impacted," Nieves conitnues. He acknowledges that therelatively flat rate of growth for overall employment is apotential impediment; "however, with 17 out of 18 industriesforecasting increased revenues, the non-manufacturing sector willcontinue on the path of steady economic growth.”

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Although the unemployment rate remained elevated at 6.7% inMarch—it declined to 6.3% in April—Thorpe notes that “at this stagein the cycle that high number is more of a function of askills-to-jobs mismatch than anything else.” Citing BLS statistics,Thorpe writes that there are currently 4.2 million job openings inthe economy, “a figure near pre-crisis levels.”

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Assuming that the unemployed were able to qualify for all ofthose jobs, “then the unemployment rate would be around 4%,” writesThorpe. “Even with that nuance, income growth is already gainingmomentum in certain markets where the unemployment rate has fallenbelow 5%.”

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.