New York, NY, May 21--Economists have cut their U.S. growth forecasts for the current quarter and the whole of 2003, a Federal Reserve Bank of Philadelphia survey said.
Economists expect gross domestic product to grow by 2.2 percent this year, down from their previous prediction of 2.5 percent made three months ago, the Fed bank said in its quarterly Survey of Professional Forecasters.
"Much of the downward revision for the year comes from a cut in the projection for growth in the second quarter," which is now expected to average 1.8 percent compared with the 2.7 percent forecast of the previous survey.
Actual GDP growth stood at a weak 1.6 percent in the first quarter, and economists expect little improvement this quarter as activity slowed down during the war with Iraq.
Forecasters still expect to see a rebound over the second half of this year, with growth expected to average 3.4 percent at an annual rate in each of the last two quarters.
For next year, economic growth forecasts are little changed at 3.6 percent.
There were no serious concerns on the prices front, with a slight increase in inflation forecasts for this year to 2.4 percent for consumer prices compared with 2.2 percent in the last survey.
For next year, the consumer price index was seen averaging 2.3 percent.
Scant progress was forecast on the unemployment front. Economists predicted the unemployment rate would average 5.9 percent this year, unchanged from the previous forecast. On a quarterly basis, the jobless rate was seen easing to 5.9 percent in the fourth quarter from 6.0 percent in the third.
Economists did trim their expectations for interest rates as economic growth was not seen picking up strongly. The yield on the 10-year Treasury note is seen rising to 4.3 percent by the end of the year, down from the previous forecast of 4.6 percent.
The survey covers 35 private-sector economists from groups as diverse as JP Morgan Chase, the National Association of Home Builders and Georgia State University.
