The country’s economic outlook is generally positive, with gains in capital spending, an easing of inflation and moderating expansion expected to continue, according to the midyear survey of the Bond Market Association’s Economic Advisory Committee.

The survey, released this week in Washington, anticipates GDP growth this year to match the 3.4 percent rise in 2005. Expansionary fiscal policy and stabilizing energy costs support the sustained development, although analysts expect GDP to drop to 2.9 percent in 2007 as the economic cycle matures.

Business capital spending continues to increase, and the survey suggests possible double-digit growth over the next year. Companies have seen profits rebound to record levels, thanks to rising productivity and solid top-line performance. Investment has also been spurred by strong, internally generated cash flow, diminishing tailwinds from aggregate demand and low corporate bond credit spreads. A sustained global economic recovery may prolong capital spending gains.

Inflation remains the chief concern to investors. Personal consumption expenditures—used as an inflation indicator by the Federal Reserve—will rise to 2.9 percent in 2006. While the number is significantly higher than in recent years, analysts say it is likely to slow to 2.1 percent in 2007. Rising energy and labor costs, however, may curb this deceleration.

The survey was conducted from June 12 to 19. Panelists surveyed represent leading securities firms and financial institutions.

—Tim Chan