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U.S. Business Survey Sees Growth Recovery After Weak Spring

The U.S. economy is set to recover momentum after slowing down in the spring, but inflation will rise in turn, the National Association for Business Economics said in a survey released May 23. Growth will be a moderate 3.0% in the second quarter to March, but rebound to 3.5% over the latter half of the year, a NABE panel of 50 economic forecasters said.

"After a mild slip during the early spring, our panel expects the expansion to regain its footing," said Carl Tannenbaum, chief economist at LaSalle Bank in Chicago and the panel's chairman.

"The NABE panel also sees higher inflation that will prompt more restraint from the Federal Reserve, which is expected to raise the funds (interest) rate to 4.0 % by early next year," he added.

For the full year, the panel revised down its growth forecast to 3.4% from 3.6% given in February's survey. Growth next year is also seen at 3.4%. The downgrade came after weak exports contributed to an ever-widening trade deficit in the second quarter. The NABE panel expects the U.S. trade deficit to reach a record $662 billion this year.

Copyright Agence France-Presse, 2005

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