Business economists have turned more negative about the US economic outlook for the next few quarters because of tight credit availability and weak consumer spending, according to a survey released on Monday. Panellists with the National Association of Business Economics now see virtually no growth in the fourth quarter and only marginal expansion in early 2009.
Two in three think the economy is in recession or will be before 2008 is over, a significant increase over the previous NABE survey taken in May. "If financial conditions fail to improve quickly, near-term economic prospects could deteriorate rapidly," said Chris Vavares, president-elect of NABE and president of the analysis firm Macroeconomic Advisers.
Real gross domestic product, the broadest measure of economic output, is forecast to grow at an annualised rate of 1.3 percent in the first quarter of 2009, perking up to 3 percent by the fourth quarter. For 2009 as a whole, growth is seen at 2.2 percent against an earlier forecast of 2.7 percent.
"Lower oil prices, a bottoming out in home prices and a better functioning of financial markets should enable the economy to resume trend-line growth by the second half of 2009," Vavares said. NABE's 48-member panel was surveyed between September 8 and 19. A supplemental poll was taken on October 1 to 2 to update views in key areas given rapidly evolving developments in financial markets.
At the time, the panel warned that GDP growth in 2009 would be lower and the jobless rate higher without the government's costly bailout plan, which has now been approved by both houses on Congress and signed by President George Bush.
In the supplemental survey, the panel fretted that the recent deterioration in credit markets could push the jobless rate by mid-2009 to 7 percent against 6.4 percent in the original poll. The panel projected US sales of autos and light trucks at 14.0 million units this year and 14.2 million in 2009, down from its May forecasts of 15.3 million and 15.7 million, respectively. Housing starts for 2009 were forecast at 1 million units, down from 1.12 million projected earlier.
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