Economists are cutting their growth forecasts for the U.S. economy this year as disappointing economic indicators continue to swarm headlines. Data on jobs, housing, manufacturing, retail and other areas of the economy show the country is limping out of the Great Recession, at best.
Macroeconomic Advisers is forecasting 2.6 percent annualized growth, down from its forecast of 3.7 percent about a month earlier, while Barclays Capital has lowered its forecast to 2 percent from 3.5 percent, the New York Times reports.
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Joshua Shapiro of the economic consultancy Maria Fiorini Ramirez is predicting 1.5 percent, about half of what he previously expected.
Officially, the economy grew 1.8 percent during the first quarter of this year, and the Commerce Department will release second quarter results on July 29.
In the fourth quarter of 2010, the economy grew 3.1 percent.
Higher food and fuel prices are chipping away at household spending, thus affecting overall economic output, economists say.
"There is no doubt the economy has slowed,” says Robert Dye, senior economist at PNC financial services in Pittsburgh, according to Reuters.
“We will call the first half of 2011 as a soft patch. We should see growth accelerate in the second half in the 3.0 percent to 3.5 percent area.”
Others agree that consumer spending remains weak.
"The softness in consumer spending is what we should keep our eye on. Clearly consumers are vital to the recovery,” says Gary Thayer, chief macro strategist, Wells Fargo Advisors in St. Louis, Missouri, according to Reuters.
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