Growth Likely to Slow in 2nd Quarter, Survey Says
The U.S. economy is expanding this quarter at about half the pace of the first three months of the year, according to the latest Blue Chip Economic Indicators survey released today.
Growth from April to June probably will cool to an annual rate of 2.9% from a first-quarter pace of 5.6% that was the fastest in almost two years, according to this month’s consensus forecast of 52 economists. The forecast for the current quarter is down from the 3.1% predicted last month and marks the second consecutive drop in expectations.
Consumer spending on services, which include everything from haircuts to health care, slowed in April, the government reported last month. And in May, Americans bought cars and light trucks at the slowest pace since November 1998, the Blue Chip report said.
Personal consumption expenditures, which account for two- thirds of the economy, “look to be the major soft spot,” the report said.
Such spending probably is increasing at a 2.6% annual pace this quarter, down from 3.2% in the previous quarter and 6.1% in the last three months of 2001, the report showed. The pace probably will pick up, accelerating to 2.8% in the third quarter and 3% in the fourth, according to the survey.
The economy probably will grow 2.8% this year, matching last month’s forecast. GDP will expand at a 3.4% annual pace in the third quarter, up from a consensus of 3.3% last month, and at 3.7% from October to December, up from expectations of 3.6% in May. The economy grew 1.2% last year.
Growth probably will accelerate to 3.6% in 2003, according to the consensus, up from 3.5% projected last month.
Although consumer spending appears to be cooling, “the outlook for capital spending is brightening and the recovery in the manufacturing sector continues to gather strength,” the report said.
Manufacturing expanded in May at the fastest pace in more than two years, buttressed by increases in new orders and production, according to figures issued last week by the Institute for Supply Management.
