Economists cut growth forecasts for 2011 and 2012

AP via Yahoo Finance ^ | September 12, 2011 | Martin Crutsinger

[Qbert]

WASHINGTON (AP) -- Confronted with an economy that has decidedly underperformed this year, economists are scaling back their growth forecasts for 2011 and next year.

In their latest forecast, top economists with the National Association for Business Economics predict that the economy will grow 1.7 percent this year -- down from the group's May prediction of 2.8 percent expansion. For 2012, the group is forecasting growth of 2.3 percent, compared to a May forecast of 3.2 percent growth.

[Snip]

The survey was done 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.

The latest NABE outlook underscores the problems facing an economy that many economists fear could be in danger of slipping into another recession.

[Snip]

Because of the slow growth, the NABE forecasters don't expect much improvement in the unemployment rate, which in August was stuck at 9.1 percent, a month when the economy didn't create any net new jobs.

For all of 2011, the economists are forecasting the unemployment rate will average 9 percent and will improve only slightly to 8.7 percent in 2012. In May, the NABE panel had projected unemployment would average 8.7 percent this year and 8.2 percent next year.

Job growth was projected to average 124,000 per month this year, instead of the 190,000 average monthly job gains the economists had forecast in May. Next year's average job growth was put at 162,000, instead of the 202,000 job gains forecast in May.

The economy needs to add at least 250,000 jobs a month to rapidly bring down the unemployment rate. The rate has been above 9 percent in all but two months since May 2009.

[ken21]

bump.

[algernonpj]

[whitedog57]

I love SGS. This economist uses SGS for criticism of The Fed and Administration “plans” for economic recovery.

http://confoundedinterest.wordpress.com

[Pollster1]

This surprising move means that next year’s shortfalls should be unexpectedly smaller than expected, unless the fact that they are adjusting their forecasts downward means that we can expect next year’s surprises to be bigger than previously expected, in which case the expected shortfalls can be expected to be reported as “unexpected” by the same margins as seen in every economic report this year.

[mamelukesabre]

I’m thinking 1.7% growth rate is even too optimistic.