Economists See Muted Growth Through 2011
Economists polled by the Blue Chip Economic Indicators newsletters increased their current-year forecast for gross domestic product to rise 3.1%, up from 3% growth seen in February, Reuters reported Wednesday. However, they also lowered their 2011 forecast to 3%, down from a 3.1% estimate given a month ago.
The Blue Chip survey is in line with other estimates, but well below that of the Federal Reserve and continues to paint a bleak picture for unemployment and a consumer-led recovery. Economists polled by the Blue Chip survey said they expect "a slower and less powerful than is typical improvement in labor market conditions that will cap gains in disposable personal income and personal consumption expenditures."
In his semiannual report to Congress last month, Fed Chairman Ben Bernanke told lawmakers the Fed expects the economy to expand 3% to 3.5% this year and anywhere from 3.5% to 4.5% in 2011. Yet even at those higher rates of growth, unemployment would still stand at 6.5% to 7.5% by the end of 2012, the Fed chief said.
The unemployment rate needs to drop to about 5% for the U.S. economy to reach so-called full employment. Joblessness currently stands at 9.7%. Economists surveyed by The Wall Street Journal forecast GDP to rise 3% both this year and next year, with unemployment ticking down to 9.4% by the end of 2010.