General Economic Forecasts Continue To Show Slow But Improving Growth

Since we’re in the middle of preparing our annual equipment and supplies market forecast, we thought we’d share the latest key macro-economic forecasts from Blue Chip Economic Indicators. In the latest survey of the 50 economic forecasting groups who participate in the newsletter, conducted July 2 and 3, the consensus forecasts slipped for 2013 and improved very slightly for later this year and 2014.

The consensus for growth of real gross domestic product this year fell to 1.8% on a year-over-year basis, its lowest level since Blue Chip began tracking the 2013 GDP forecasts in January 2012. The economists were responding to a sizeable 0.6 point reduction to only 1.8% growth in its third estimate of the first quarter. The group also reduced the current forecast for Q2 growth downward 0.1 point to 1.7%. Annualized quarterly GDP is still forecast to grow 2.3% in Q3 and the group raised the Q4 forecast 0.1 point to 2.7%. The group’s consensus forecast for year-on-year real personal consumption spending also was cut to 2.1% for ’13 from 2.3%. Real disposable personal income growth is pegged at a paltry 0.8% this year.

The Blue Chip economists returned their forecast for 2014 real GDP growth to 2.7% this month. It had dipped to 2.6% in the June survey after remaining at 2.7% March through May. Real DPI growth is predicted to be 2.7% next year as well, up from 2.6% in the June survey. The real PCE forecast for ’14 has held at 2.5%since March.

The group’s inflation forecasts continue to fall. The year-over-year Consumer Price Index is now forecast to rise only 1.5%, its smallest increase since the near-deflation year of 2009. But prices that influence foodservice consumer behavior and operator margins have been more volatile. Wholesale food prices, especially for key proteins, are showing some upward pressure (see article this issue) and gasoline prices have spiked during the past few weeks and are running about 23 cents higher than at this time last year.

If you join us for the President’s Preview meeting in Rosemont, Ill., on Aug. 7, you’ll receive a lot more detail.