Business Forecasters See Slow Growth Ahead

Washington, DC, Oct. 12, 2010--The National Association for Business Economics cut its forecast for annual growth in gross domestic product to 2.6% for 2010, down from a springtime estimate of 3.2%.

In addition, the group cut projected 2011 growth to 2.6% from 3.2%.

NABE also said the U.S. unemployment rate is likely to remain above 9% through 2011 — a forecast that would "mark the worst post-recession job recovery on record."

In its latest survey, NABE said most forecasters believe the U.S. won’t slip back into another recession. Yet they see little evidence that growth will sharply accelerate in the near future.

Low stock prices, falling home values and persistently high unemployment would curtail spending by anxious consumers, economists say.

Weakness in the U.S. housing market, historically a major driver of economic growth, would also constrain the recovery, NABE members said. Forecasters predict 750,000 housing starts in 2011, bouncing along a 60-year low.

The lone bright spot: business spending on new equipment. The NABE projects double-digit growth in business investment, propelled in part by strong profit growth.

The biggest concern among business economists is the U.S. budget deficit and exploding national debt. They expect the national deficit to fall slightly in fiscal 2011, to $1.2 trillion.

“NABE panelists continue to characterize excessive federal indebtedness as their single greatest concern going forward, even exceeding worries about high unemployment, and far greater than either inflation or deflation,” the group’s survey said.