By Agence France-Presse Top U.S. analysts have cut their forecasts for U.S. economic growth this year, a survey by the Federal Reserve Bank of Philadelphia showed May 20. On average, the 35 economists polled forecast that real gross domestic product (GDP) would grow 2.2% in 2003, down from expectations just three months ago of 2.5%. Most of the downgrade was caused by crumbling expectations for the second quarter of this year. Economists predicted GDP would grow an annual pace of 1.8% in the second quarter, dramatically down from the previous forecast for 2.7% growth. However, "the forecasters continue to expect a rebound over the second half of the year," the Federal Reserve Bank of Philadelphia survey said. U.S. economic growth was expected to average 3.4% in each of the last two quarters of 2003, barely changed from the previous survey, the Bank survey said. The unemployment rate was expected to average 5.9% over the whole of 2003, unchanged from the forecast of three months ago. Next year, the jobless rate was forecast to decline only slightly to 5.7%, compared to the previous expectation for a sharper drop to 5.5%. "On the inflation front, the forecasters see prices rising at a slightly higher rate this year and a slightly lower rate next year than they predicted three months ago," the bank said. Comparing the last quarter of this year with the same period last year, consumer prices were expected to rise by an average of 2.4% this year, compared to the previous forecast of 2.2%. On the same basis, prices were set to rise 2.3% next year, compared to the previous forecast of an increase of 2.4%. Long-term expectations for inflation were unchanged, with consumer prices predicted to rise by an annual average of 2.50% over the next decade. Forecasters said there was a 20% chance of an economic contraction in the current April-June quarter of this year, barely changed from the previous estimate of a 21% probability. Copyright Agence France-Presse, 2003
