US business economists expect economy to worsen

16 July 2012 19:45  [Source: ICIS news]

WASHINGTON (ICIS)--US business economists expect worsening conditions ahead because of diminishing sales and profits, reduced hiring and weakening optimism for GDP growth amid rising concerns over the euro zone crisis, a major survey said on Monday.

In its quarterly survey of corporate economists nationwide, the National Association of Business Economics (NABE) said that its members also are worried about negative impacts from the expiration of major Bush-era tax cuts in December and automatic US government spending cutbacks in January.

NABE said that its member economists have lost earlier optimism about near-term prospects for US gross domestic product (GDP) growth.

Over half of the surveyed economists expect that US GDP expansion over the next 12 months will be 2% or better, while 40% of respondents expect the nation will see growth below 2%, perhaps as low as 1% in the view of 11% of the analysts.

In the prior NABE quarterly survey, only 23% of economists said that GDP growth over the next year would be below 2%.

In addition, only 23% of the responding economists said they think US employment will show improvement over the next 12 months, down from the 39% who were hopeful of new job gains in the prior quarterly survey.

The NABE survey respondents said that the European sovereign debt crisis and related euro zone financial flailing have had “significant negative impact on their sales and is likely to continue to do so”.

Nearly half of those surveyed said that their companies’ sales have fallen due to the euro crisis, and about half of them expect the crisis will lead to further sales declines over the next six months.

The survey also indicated that US firms expect to make fewer capital expenditures in the near term.

The NABE survey comes in the wake of other economic data, including a three-month decline in US retail sales, the nation’s manufacturing sector entering a period of deceleration, and the Federal Reserve Board lowering its outlook for the next two years while small business operators are increasingly losing confidence in the nation’s recovery.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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