More revised economic forecasts
While there has been some marginally positive economic news in recent weeks, such as the July jobs numbers and growth in the stock market, a new report from the Federal Reserve Bank of Philadelphia shows a less than stellar economic forecast for the rest of the year and into the beginning of 2013:
According to the regional bank’s Survey of Professional Forecasters, real gross domestic product is expected to grow at only a 1.6% annual rate this quarter and 2.2% in the fourth quarter, down from 2.5% and 2.6% forecast three months ago.
The 48 forecasters surveyed also trimmed their view for the first and second quarters of 2013, with growth of 1.8% and 2.3%, compared with earlier projections of 2.6% and 2.7%.
Lower economic activity forecasts are leading to reduced expectations for job growth. The forecasters now see payroll gains averaging 125,000 per month this quarter and 135,300 in the fourth. That hiring pace is down sharply from the gains of 170,000 and 172,600 expected in the second-quarter survey.
Slower hiring means the U.S. unemployment rate will remain above 8% until the second quarter of 2013. In the previous forecasts, the economists thought the rate would fall below 8% by the fourth quarter of this year.
Last month, the Commerce Department reported anemic economic growth for the second quarter of the year . And while job creation numbers were certainly better in July, 150,000 Americans left the labor force and the U-6 unemployment rate ticked up to 15%. The U-3 rate, which is what most media outlets report went up to 8.3%.
And not only does the Federal Reserve see growth slowing, but James Pethokoukis notes a report from IHS Global showing less rosy expections for the United States’ still struggling economy:
But despite the weak economic growth forecast, President Obama continues to drive the economy down a road that could lead to more problems. Nick Gillespie recently noted that the looming “fiscal cliff” is hurting businesses. They’re simply scared to invest because of the threat of higher taxes, economic uncertainty, and, as Gillespie explains, the “lack of clarity about who will win the fall elections, the actual costs of implementing Obamacare, and tons more.”
It’s recipe for disaster, but unless President Obama and Senate Democrats come to their senses and actually do something that encourages growth, the economy is going to continue its current sluggish pace or worse.