Business economists are giving a more pessimistic outlook about US economic growth this year for the third consecutive month and uncertainty over the November presidential election has proven to be damaging.
The median estimate from economists surveyed by the National Association for Business Economics, calls for gross domestic product growth of only 1.8%, down from the 2.2% forecast in March. The outlook for next year calls for 2.3% growth, AP reported.
The survey released Monday also shows the forecast for growth in corporate profits swinging from a 2% gain in March, to negative 2% in June.
Of the economists surveyed, 57% said that uncertainty over the election led them to reduce their expectations.
Doubts about the economy deepened Friday when the government reported that hiring in May slowed to a near-standstill. While unemployment slid from 5% to 4.7%, the lowest since November 2007, the rate fell for a troubling reason: Nearly a half-million jobless Americans stopped looking for work and so were no longer counted as unemployed.
Employers added just 38,000 jobs in May, the fewest in more than five years.
The surprisingly weak jobs report raised doubts that the Federal Reserve will increase short-term interest rates at its next meeting in mid-June or perhaps even at its subsequent meeting in July. Rates have hovered around zero for seven years and almost everyone had expected the Fed to grow more aggressive this summer.
Economic unease has shaken up the upcoming presidential race.
Around 49% of the economists in the NABE survey see a positive impact on economic growth this year from low oil prices, as opposed to 18% viewing it as a negative. For next year, 55% see the impact as positive and 7% as negative.
The economists expect home prices to increase 5% for the fourth quarter, unchanged from the March forecast. The median estimate is for the growth in home prices to slow to 4.3% next year, just above 4% forecast in March.
Another negative political factor for economic growth: the rise of nationalist views such as trade protectionism around the world was chosen by 38% of those surveyed as the factor most likely to significantly reduce global growth in the next two years. Some 16% chose terrorism.
The survey of 48 forecasters was taken between May 2 and May 17.
