Macro Economic Forecasts Continue To Fall

When the year began, the 50 major economic forecasting groups polled monthly by Blue Chip Economic Indicators believed real U.S. gross domestic product would grow 3.1% this year and 3.2% in 2012. At the beginning of September, the consensus forecasts had fallen to just 1.6% for ’11 and 2.2% next year. Forecasts for real growth of disposal personal income and personal consumption expenditures for next year also fell again, with both hovering at only about 2%.

In his commentary accompanying the forecasts, Blue Chip Executive Editor Randall Moore noted the variety of factors dampening economic growth in the U.S.: tepid job growth, constrained household balance sheets, softer than anticipated demand for goods and services, fiscal restraint at the state and local levels, and a housing market that remains very weak. Add in the battle over the debt ceiling, the sovereign debt crisis in Europe and the perception that neither Congress nor the Federal Reserve have the tools or will to further stimulate the economy and the result has been increased caution and confidence by consumers and businesses alike. In other words, it’s not a pretty picture.