Economists Revise Growth Forecast Down

Washington, DC, Sept. 9, 2010--U.S. economic growth for the rest of this year and next was revised lower for a third consecutive month, according to the Blue Chip Economic Indicators report.

The panel of economists said the weaker outlook for second-half 2010 growth is due to lower expectations for consumer spending, business investment and private construction.

"Growth in the current quarter now is expected to be little better than the disappointingly soft advance registered last quarter," the survey said. Gross domestic product grew at a meager 1.6% annual rate in the second quarter, less than half the first quarter's 3.7% rate.

But the economists' group said that, after the mid-year soft patch, it saw a gradual improving trend setting in with growth slightly surpassing trend rate in the second half of 2011.

Blue Chip defines GDP trend growth at about 2-3/4% a year.

"For all of 2010, real GDP now is forecast to increase 2.7% on a year-to-year basis, 0.2 of a percentage point less than a month ago and 0.6 of a point less than predicted in June," the survey said.

"Given the depth of the recession, a forecast of roughly trend growth this year and next amounts to a very disappointing pace of recovery, with little progress expected to be made in lowering the unemployment rate," the forecast said.

Its consensus forecast is that the U.S. unemployment rate will end this year at 9.6% and fall only to 9% by the end of 2011.