U.S. economic growth in the second quarter will be far weaker than previously expected and it will prevent the pace of growth from exceeding last year's 2.4 percent, according to a forecast by a group of U.S. business economists.
Growth is expected to accelerate significantly in the third quarter, but "sluggish" conditions in the first three months of the year will persist into the second quarter and drag down average growth for the year, a survey by the National Association for Business Economists said Monday.
The survey of 47 economists from companies, trade associations and academia was conducted from May 8 to May 20.
A growing number of economists in the survey believe that the Federal Reserve will begin raising interest rates in the third quarter. Many had expected a second-quarter increase until the year started off so slowly.
The labor market will improve at a slower rate also, according to the survey, but job growth will remain "robust." Economists now believe payrolls will grow by 217,000 per month in 2015, down from an earlier forecast of 251,000. Last year the economy added 260,000 jobs per month on average.
A stronger U.S. dollar is hampering growth by making U.S. goods more expensive overseas, and slower growth in China is also taking a toll on the U.S. economy, according to the survey.
The group's forecast for U.S. economic growth in 2015 fell to 2.4 percent, from 3.1 percent in March.
The Federal Reserve also has revised its expectations for growth after a difficult winter. It expects economic growth for the year to average between 2.3 percent and 2.7 percent, down from a range of 2.6 percent to 3.0 percent it projected in December.
Still, the survey pointed to a number of positive economic indicators despite what it described as a "disappointing" start to 2015. The NABE panel expects consumer spending, residential investment and government expenditures to increase at a faster pace in both 2015 and 2016 compared with last year.