The statistics showed the economy grew at a 1.9 percent
annual pace from January to March instead of the previously
announced 1.6 percent increase, the Blue Chip report said.
The consensus called for growth this quarter to reach a 2
percent annual pace, down from a 2.1 percent forecast last month.
Economic growth will then accelerate to 3.5 percent from July to
September and improve to 3.7 percent by the last three months of
the year, the same as projected last month.
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The forecast for 2004 held at 3.6 percent, where it’s been
every month this year except for a dip to 3.5 percent registered
in April.
Economists surveyed by Blue Chip are more upbeat about the
second half of the year than those surveyed by Bloomberg News.
Economists lowered the expectations for third quarter growth to
3.2 percent from 3.5 percent, and to 3.5 percent from 3.8 percent
for the last three months of the year, according to the Bloomberg
survey released yesterday.
In the Blue Chip survey, a better outlook for disposable
personal income, consumer spending, and corporate profits was
almost offset by greater pessimism about corporate spending and
industrial production, the report showed.
The improvement in income “no doubt resulted from passage
over the past month of the federal tax cut package that was more
front-loaded than originally anticipated,” the report said.
Incomes are now expected to rise 2.8 percent this year compared
with the May estimate of 2.5 percent.
The economists were almost evenly split on whether Federal
Reserve policy makers will lower the target for their benchmark
interest rate again this year with 52.5 percent calling for no
change in policy and 47.5 percent projecting the rate would be
lowered, according to the results of a special question.
Four out of every 10 economists polled thought the Fed would
resort to using “unconventional methods,” such as buying U.S.
Treasury securities in the open market, to help lower interest
rates and stimulate growth.
In a separate question, 84.6 percent of those polled thought
the next 20 percent move in stock market prices would be to the
upside.
Economists at Genetski.com have the most optimistic forecast
for 2003 at 3 percent. Those at Daiwa Institute of Research
America are the most pessimistic with projected growth of 1.8
percent.
Bloomberg News
