WASHINGTON The recession-bound U.S. economy is still expected to resume growing in the second half of this year, but at an even slower pace than previously thought as consumers spend cautiously, the Blue Chip survey of 52 economists said on Tuesday.
A poll on February 4-5 for the monthly Blue Chip Economic Indicators February newsletter scaled back forecasts for second-half growth from those made in January but continued to predict the United States will come out of recession in 2009.
The Blue Chip economists now forecast a 0.8 percent gain in third-quarter U.S. gross domestic product, down from the 1.2 percent gain they estimated in January. Fourth-quarter growth is seen at 2.0 percent rather than 2.2 percent.
The economy officially slipped into recession in December 2007. Many economists expect the combination of a sinking labor market, falling stock prices and a severe housing downturn will make it the most severe recession in decades.
"The year-over-year contraction in real GDP this year now is expected to equal the decline registered in 1982 that was the largest in the post-World War Two era," the Blue Chip economists said.
The Commerce Department said last month that U.S. GDP, the measure of total goods and services output within U.S. borders, contracted at a 3.8 percent annual rate in the fourth quarter of 2008, its weakest performance in 27 years.
A buildup in inventories late last year is expected to be a significant factor restraining GDP performance during the first half this year.
The Blue Chip economists said the United States' real net export deficit should narrow this year and said that will contribute to a resumption of GDP growth. They warn the deficit may resume widening by year-end as domestic demand pushes imports up, but the full-year trade deficit still should show improvement.
The trade deficit shrank nearly 29 percent in November, the largest decline in 12 years, Commerce Department data showed in a January report.
This month's consensus forecast predicts less deterioration in the deficit over 2010 than was expected a month ago. The consensus put this year's real net export deficit at -$339.4 billion and next year's at -$353.7 billion.
Of the economists polled, 32.6 percent believe the unemployment rate will peak in the fourth quarter, up from 31.4 percent polled for the January survey.
After the survey was taken, Labor Department data showed employers slashed 598,000 jobs in January, the biggest monthly loss in 34 years, and the jobless rate soared to 7.6 percent, its highest level since September 1992.
The February prediction for economic growth in 2009 slipped to -1.9 percent from -1.6 percent in January, while the forecast for 2010 fell to 2.1 percent from 2.4 percent estimated in January.
Panelists said the bulk of the deterioration in first-half 2009 growth stems from expectations of a sharp correction in business inventories that could subtract as much as 2.0 percentage points from GDP in the first quarter.
(Reporting by Nancy Waitz; Editing by Jonathan Oatis)