Economists Reduce U.S. Growth Estimates as Lack of Jobs Hinders Consumers

[marmar]

Aug. 11 (Bloomberg) -- A lack of jobs will shackle consumer spending and restrain the U.S. recovery more than previously estimated, according to economists polled by Bloomberg News.

Gross domestic product will expand at an average 2.55 percent annual rate in the last six months of 2010, according to the median of 67 estimates in a survey taken July 31 to Aug. 9, down from the 2.8 percent pace projected last month. Household purchases will climb at a 2.25 percent rate, compared with a 2.6 percent gain previously forecast.

“Simply put, job growth in the private sector hasn’t improved as we would’ve expected,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “The consumer continues to contribute to growth but at a subpar pace.”

Federal Reserve policy makers yesterday also lowered their sights on the projected speed of the economic rebound, prompting officials to take additional steps to bolster the economy for the first time in a year. Slack growth will push back the first increase in the central bank’s target interest rate until the second half of 2011, according to the Bloomberg survey.

Consumer spending, which accounts for about 70 percent of the economy will grow 1.5 percent this year, down from a 2.4 percent gain forecast a month ago, according to the survey median estimate. In addition to the lowered expectations for the second half of 2010, the downgrade also reflects the annual GDP revisions issued by the Commerce Department last month. .........(more)

The complete piece is at: http://noir.bloomberg.com/apps/news?pid=20601087&sid=ae3.f0kAo0io&pos=3

[Imajika]

1. At what point do they stop calling it a recovery?

I mean, are we in recovery till the next recession? As we haven't ever really "recovered" and are now slipping backward, why does everyone still call it a recovery?

[Statistical]

4. When GDP growth goes negative.

Say you are $10,000 in the hole. Each month as long as you pay down the principle (payment greater than interest) then your debt is recovering. Now maybe you goal was to knock down your debt by $500 a month however things are going slower, rougher than expected so you are only paying it down on average by $180 a month. Still your debt is recovering. It is just a slower and more uneven recovery than you had planned on. At this rate it might take years (even a decade) to pull yourself out of this whole however as long as forward progress is made then the situation is recovering (although painfully slow).

As long as US economy is growing (even +0.000000001%) then technically we are in a recovery. Now the recovery is anemic at best and it is so marginal it may not take very much to push us back into a recession but until that happens it is recovering.

+ growth = recovering
- growth = recession

[xchrom]

2. recommend

[Tuesday Afternoon]

3. K&R

[Warpy]

5. Well, at last they've discovered the demand side

which is a great leap forward for a generation of perpetually surprised men who were educated with Friedman's ramblings as their gospel.

Undercapitalized businesses can often manage to stay afloat. I know, I've owned a couple and worked for others. Businesses with a dwindling customer base are going to go under, no matter how much money the owners have in the bank to throw at it to try to keep it afloat.

[rucky]

6. This is why corporations need to adopt Trickle-Up Economics.

They'll do better in a producer/consumer economy than a speculative bubble/burst one.