Survey strikes a gloomy note
The economic slowdown in the United States will be deeper and the recovery weaker than previously forecast, according to a Bloomberg News monthly survey.
The world's largest economy will grow at an annual rate of 0.3 percent from January through June, a half point less than projected in February, according to the median estimate of 62 economists polled from March 3 to March 10.
Rising fuel prices, shrinking payrolls and falling home values will weaken consumer spending and blunt the impact of tax rebates that start going out in May. The Federal Reserve, struggling to offset the credit crunch and housing contraction, will cut the benchmark interest rate by another percentage point and keep it at 2 percent through December, the survey predicts.
"We're now more pessimistic about the pace of recovery into 2009," said Richard Berner, co-head of global economics at Morgan Stanley in New York. "We now see the Fed pursuing a slightly more accommodative path for monetary policy than just a week ago."
The odds of a recession over the next 12 months were pegged at 50 percent, the same as in the February survey, according to the median estimate of 42 economists that responded to the question.
"The debate is shifting from whether it is a downturn to how long and how deep it will be," said Kurt Karl, chief US economist at Swiss Re in New York. "We have a 55 percent probability of recession. Now it looks like it's starting in the current quarter."
The economy's rate of expansion anticipated for all of 2008 fell to 1.4 percent, the weakest since the last recession in 2001. Economists cut the projected rate for the first quarter to a 0.1 percent annual pace, from a 0.5 percent rate in the prior survey. They saw second-quarter growth at 0.5 percent, down from the 1 percent forecast last month.
The growth rate in the last since months of the year was reduced to 2.2 percent from an average 2.4 percent forecast in February.
Agencies
(China Daily 03/12/2008 page17)
