WASHINGTON (Reuters) - U.S. economists in the closely watched Blue Chip Economics Indicators group expect gross domestic product growth in 2010 to expand by 2.7 percent unchanged from last month’s projection.
The panel of top forecasters expect foreign trade to be a drag on GDP going forward as gains in imports outstrip those in exports, according to the survey conducted on December 2-3 and released on Thursday.
“Although exports continue to grow, improving domestic demand and higher petroleum costs are producing even faster increases in imports,” the survey said.
The panel also expects further contractions in commercial construction and cutbacks in spending and investment by state and local governments, the survey said.
Propping up GDP will be “steady, if unspectacular growth” in personal consumption, residential investment and capital spending with a reduced rate of business inventory liquidation adding materially to growth in the near-term, the survey said.
The panelists forecast GDP to contract by 2.5 percent this year on a year-to-year basis reflecting the downward revision in the government’s estimate of the annual growth rate in the third quarter to 2.8 percent from 3.5 percent.
In the November survey, the panelists forecast GDP for 2009 to contract by 2.4 percent. This is the first backtrack since May when forecasts began to show steady improvements.
While the consensus foresees headline inflation increasing a bit, most analysts forecast a further decline in core inflation.
“Subdued inflation and a persistently high unemployment rate are expected to keep the Federal Reserve from raising its overnight interest rate target until the second half of next year,” according to the Blue Chip survey.
Reporting by Nancy Waitz