A survey from the National Association for Business Economics predicts that GDP will grow 2.8% this year, down from the group's February prediction that it would grow 3.3%.
Economists' outlook for consumer spending and the housing market also weakened, in part because they expect oil prices to stay above $100 a barrel through 2012.
The NABE survey of 41 economists released Monday said concern remained high about the growing federal deficit, and said growth in the first quarter had been weaker than expected.
The predictions of the economists reflect the jitteriness of a public that is still recovering from the financial crisis and now getting squeezed by rising prices for gas, groceries and other household items. Retailers of all stripes are paying more for the raw materials they need to make and transport their products, such as fuel, cotton and wood pulp, and saying they have no choice but to pass along the price increases to customers.
The NABE's outlook survey is released every quarter. For this report, the poll was conducted April 13 to May 1. For the last report, released in February, the economists were polled Jan. 25 to Feb. 9. Since then, unrest has spread in the Middle East and North Africa, which has played a role in the higher prices.
Besides lowering anticipated GDP growth to 2.8%, the economists also lowered predictions for consumer spending growth this year (2.8%, down from 3.2%), and housing starts (610,000, down from 660,000). They also expect housing prices to fall 1.5%, after saying earlier that they would rise 0.4%.
Oil will average $105 per barrel this year, the economists said, up from $93 predicted in the last survey. Oil closed at $99.65 a barrel on Friday. A gallon of regular gas averaged $3.96 a gallon that day, according to AAA.
Lower Growth, High Oil Prices Forecast
Source: Associated Press (5/17/11)
"Economists' predictions reflect public's jitteriness."