Tags: Economists | US | Growth | Jobs | Outlook

Economists Cut US Growth, Jobs Outlook as Confidence Plunges

Monday, 12 Sep 2011 01:32 PM

Economists last month slashed their growth forecasts for the United States, a survey showed on Monday, with most seeing at least even odds that the Federal Reserve will buy new bonds to help juice up the recovery.

The National Association for Business Economics' latest survey showed forecasters on average see 2.3 percent GDP growth next year, down from the 3.2 percent pace they expected in May.

They also cut their forecasts for 2011 growth to 1.7 percent from 2.8 percent, following large government revisions to GDP growth estimates for the first half.

The survey was conducted over the two weeks that began Aug. 10, a day after the Federal Reserve downgraded its own assessment of growth and signaled it would keep short-term interest rates near zero until at least mid-2013.
___________________________________________________________

Economist Warns: 50% unemployment, 90% stock market drop, 100% inflation.
See the Evidence. Click Here to Watch the Aftershock Survival Summit Now.
_______________________________________________________

The Fed has kept rates near zero since December 2008, and bought $2.3 trillion of long-term securities in two rounds to push down longer-term borrowing costs as well. The latest round of purchases ended in June.

Some 43 percent of respondents said that a third round of Fed bond-buying within the next two years is likely, and another 33 percent gave it even odds. That was before the U.S. government's latest labor market report, which showed that the economy overall added no jobs in August.

A Reuters poll of primary dealers following the dismal jobs report put the probability of a new round of quantitative easing within six months at 45 percent. 

Joblessness topped the list of economists' worries in the NABE survey, as forecasters cut their expectations for jobs growth, and now see the unemployment rate — which registered 9.1 percent in August — falling just to 8.5 percent by the end of next year. In May, they expected it to fall to 8 percent by then.

They now expect the economy to fall short of full employment until at least 2015.

Economists expect consumer spending growth to slow sharply, rising just 2.1 percent this year and next, down from a 3 percent pace in 2010. In May they expected consumer spending to be up 2.8 percent in 2012.

They also see a slower housing recovery, projecting that prices will fall 2 percent this year, before rising 1 percent next year. They had expected a 1.5 percent decline this year, and a 2 percent rise in 2012.

The constellation of concerns is largely consistent with those expressed by top Fed officials, including Fed Chairman Ben Bernanke, who last week listed "persistently high unemployment" among reasons for sluggish consumer spending, and the weak housing market as a continuing drag.

Notably economists kept their forecast for the core PCE price index — the Fed's preferred measure of inflation — at 1.7 percent for next year.

On Thursday, Bernanke said higher inflation is transitory and has not become ingrained in the economy.

Some 58 percent of the forecasters said that the U.S. budget battle that brought the nation to the brink of a possible default in early August made them less confident that the United States will deal with its deficit problem.

© 2017 Thomson/Reuters. All rights reserved.

 
1Like our page
2Share
Headline
Economists last month slashed their growth forecasts for the United States, a survey showed on Monday, with most seeing at least even odds that the Federal Reserve will buy new bonds to help juice up the recovery. The National Association for Business Economics' latest...
Economists,US,Growth,Jobs,Outlook
2070
2011-32-12
Monday, 12 Sep 2011 01:32 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved