Economists expect slower US growth, says survey US services firms expanded, but slower pace in May
Forecasts for US economic growth are coming in slightly lower after a weak first quarter, according to a survey of business economists released yesterday.
The National Association for Business Economists says it’s expecting gross domestic product growth of 2.2 percent this year and 2.4 percent in 2018. Those forecasts are down 0.1 percentage points from a survey in March. The survey is based on responses from 52 professional forecasters.
The gross domestic product - the broadest gauge of the economy expanded in the January-March quarter at a 1.2 percent annual rate. That was better than initially forecast, but still weak. Unseasonably warm weather was one reason for the slow growth, since it limited spending on utilities.
Economists forecast GDP growth will rise 3.1 percent in the April-June period and 2.5 percent in the second half of the year. They’re forecasting solid hiring and a low, 4.5-percent unemployment rate, which should help boost consumer spending. Inflation also is expected to remain in check
Most of the economists surveyed believe President Donald Trump will enact an infrastructure plan and cut corporate and individual taxes before the end of 2018. That will have a positive impact on economic growth, but likely not until 2018, the survey said.
There are downside risks. Just over one-third of the panelists say trade protectionism, a strong US dollar and higher interest rates could pose a risk to the economy in 2018. But 60 percent say there’s more chance of an upside risk thanks to expected corporate tax reform, individual tax cuts and infrastructure spending. Nearly all the panelists - 95 percent - think the chance of a recession this year is 25 percent or less.
US services companies expanded at a slightly slower pace in May compared with the previous month, a sign that modest economic growth is likely to continue. The Institute for Supply Management, a trade group of purchasing managers, says its services index slipped last month to 56.9 from 57.5 in April. Any reading above 50 indicates expansion.
Sales and new orders grew more slowly, while a measure of employment showed companies stepped up hiring. Growth has likely picked up in the April-June quarter after a sluggish start to the year.
Americans are spending a bit more, which boosts services firms, such as retailers, restaurants and hotels. Economists forecast growth will reach an annual pace of 3 percent, up from just 1.2 percent in the January-March quarter. —AP