Confronted with a decidedly underperforming economy, economists have scaled back their growth forecasts for the rest of this year and 2012. In their latest forecast, top economists with the National Association for Business Economics predict the economy will grow 1.7% this year, down from the group’s May prediction of 2.8% growth. For 2012, the group is forecasting growth of 2.3%, compared to a May forecast of 3.2% growth.
The new survey, released today, is in line with the outlook of other economists who have marked down growth prospects to reflect an economy struggling to deal with a spike in gasoline prices, production disruptions stemming from Japan’s earthquake, a flare-up of Europe’s debt problems and the prolonged debate over America’s debt ceiling. The economy grew 3% in 2010, the first full year after the country emerged from the 2007-2009 recession, but slowed to an annual rate of 0.7% in the first six months of this year.
“A wide variety of factors were seen as restraining growth, including low consumer and business confidence,” says Gene Huang, the president-elect of NABE and one of 52 professional forecasters who participated in the survey. “Panelists are very concerned about high unemployment, federal deficits and the European sovereign debt crisis.” The survey was completed before President Barack Obama appeared before Congress on Thursday to unveil a new $447 billion plan to jump-start job growth through a combination of tax cuts and government spending.
