WASHINGTON, July 21, 2008
Economists: 2nd Half Growth Likely Anemic
45 Percent Of Economists Surveyed Say Market Will Not See Growth Because Of Energy Pricing, Housing And Credit Problems
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(CBS)
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Interactive Eye On The Economy In-depth features on U.S. markets, taxes, employment and the Federal Reserve.
Forty-five percent of economists believe the economy won't log any growth or will clock in at a feeble 1 percent pace in the final six months of this year, according to a survey being released Monday by the National Association for Business Economics, which is known by the acronym, NABE. And, 10 percent think economic activity could actually contract during the period.
"Forecasters are approaching the second half with a lot of caution," Ken Simonson, point person on the survey and chief economist for the Associated General Contractors of America, said in an interview. "Most forecasters are suggesting the outlook will be sluggish, but not desperate. I'm afraid we're stuck on the ground floor of growth."
Thirty-two percent, meanwhile, think the economy growth's during the second half could be between 1 and 2 percent, which would mark a plodding performance. The more bullish are clearly in the minority camp: 11 percent think growth will come in between 2 and 3 percent. Only 1 percent expect growth to surpass 3 percent.
The economy's growth slowed sharply in the final quarter of 2007 and remained stuck in a rut in the first quarter of this year. Tax rebates, which have energized shoppers, should help lift the country out of the doldrums somewhat in the second quarter. The government releases its estimate of the second-quarter's economic performance at the end of this month. However, as the bracing force of the rebates fade, some analysts fear the economy could hit another rough patch near the end of this year.
Earlier this year, many thought that the first half of this year would be difficult and the second half would be stronger, lifted by the government's $168 billion stimulus, including tax rebates for people and tax breaks for businesses. With the rebates kicking in earlier than some expected, the second half could turn sluggish.
Many have "abandoned the notion of seeing a rebound," Simonson said.
Federal Reserve Chairman Ben Bernanke, who briefed Congress on Tuesday and Wednesday, warned that over the rest of this year, the economy will grow "appreciably below its trend rate" mostly because of continued weakness in housing markets, high energy prices and tight credit conditions.
Normal activity would be along the lines of a 2.5 percent to 3 percent growth rate for the economy.
Not only is the country slogging through lethargic growth, but it is also confronted by rising prices that threaten to spread inflation.
In the NABE survey, 75 percent reported paying more for raw materials, such as fuel and steel. That's the highest percentage in record keeping going back to 1994. Those higher prices are squeezing profit margins and leading some firms - 35 percent - to boost their prices, the survey found. That's up from the 29 percent who said their companies raised prices in the previous survey in April.
Consumer prices in June rose at the second-fastest pace in a quarter century, the government reported Wednesday. Wholesale prices also went up sharply during the month.
Meanwhile, most forecasters expect a continued slowdown in housing over the next six months, although they think it will be "mild" versus "substantial."
Grappling with fallout from housing and credit troubles and stung by high costs for energy and other raw materials, employers have cut jobs in each of the first six months of this year. Over the next six months, 51 percent said they expected to hold payrolls steady. Twenty-nine percent expected to boost them and 20 percent thought jobs would be reduced through layoffs or attrition.
Caught between slow growth and rising prices, the Fed is likely to leave interest rates alone when they meet next on Aug. 5. Boosting rates to fend off inflation would deal a setback to the economy and further hurt the housing market. The Fed can't afford to lower rates more to shore up economic activity because that would make inflation worse.
Sixty-two percent said the Fed's nearly yearlong string of rate reductions and other steps to prop up financial markets, had no effect on their business.
The survey, based on the responses of 101 NABE members, was conducted between June 19 and July 10.
© MMVIII The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
Best-selling author Mitch Albom on his first nonfiction work since "Tuesdays with Morrie."
Hey what do you know, the so called experts have finally realized what the working john and Jane doe have known for over 3 years.
DaysRnumbrd, IMHO the only reason we haven''t seen the consecutive two quarters of negative growth that would be quantified as a recession is because the government continues to throw obscene amounts of money at the two wars and homeland security.
The study, conducted over the past few weeks and released Monday, found that rising energy costs, tighter credit and a declining dollar have all taken their toll on small companies: 57% of those polled said the economic climate has affected their business "moderately" or "severely." Government actions aren''t helping: The economic stimulus checks made no difference to their business, 78% of respondents said. While 72% said the government is bailing out big businesses and Wall Street, just 4% think Washington is helping foundering small companies.
Such "artists" only create useless garbage, even the rosiness of their pictures is painted on a canvas of prevarication and indifference.
This Orwell 1984 speak is irritating." Posted by whitemale08
Strangely enough, Marcus Garvey said it more than 100 years ago, when he advised "Black" people not to use credit, saying "Credit is the road back to slavery"
But wait! Bush said when he doubled the national debt that the resulting growth in the American economy would MORE than make up for the resulting deficits. We should be seeing HUGE growth by now, not anemic growth. What''s up, supply-siders? What happened to ''morning in America''?? Each of us now owe''s $30,000 to those who loaned us the money, from the moment of our BIRTH. How was this part of the great Bush plan??
I would like to know what the "economists" define as "growth".
The government economists do one thing, and one thing very well...
...they paint rosy pictures! (They are more "artist" than "economist")
FDR rescued the U.S from the Great Depression after Republican Herbert Hoover plunged the economy into the ditch.
The article goes on to say the Republican George Bush is the worse president in terms of the economy and war since Republican Herbert Hoover making it clear that Republican trickle-down voodoo economics never work.
http://bloomberg.com/apps/news?pid=20601087&sid=aKIkmrDcRKv4&refer=home
The economy has been contracting for the last 8 years.
Debt is not production.
Debt is not growth.
Debt is not prosperity.
Debt is not wealth.
Like the scriptures say: "debt is slavery"
Debt is Serfdom.
Since when did home equity line of credit replace income. Credit lines mean debt. Give me a break.
Debt is poverty just like Thomas Jefferson said: "Paper is poverty."
This Orwell 1984 speak is irritating.