Foodservice Equipment Reports

Economists Cut Forecasts, But Remain Upbeat About 2015 And Beyond

The 50 economic forecasting groups polled monthly by Blue Chip Economic Indicators remain upbeat, in spite of two months of cuts in the consensus forecasts for 2015 in the March and early April surveys; the latter was released last week. The forecasters expect little slowdown in 2016 and then only slight declines over the next several years, according to their longer-range predictions. The slowing forecasts come as harsh winter weather and the recently resolved West Coast port slowdown hurt the economy more than previously thought.

The latest forecast for growth of real gross domestic product this year slid to 2.9% from 3.2% and 3.1% in the January and February surveys, respectively. But forecast growth of real disposable income in 2015 rose to 3.5% from 3.3% in the March estimate then held in April, while predictions about personal-consumption spending continued to be elevated at 3.3%.

As BCEI Executive Editor Randy Moore put it, “Because real GDP still is forecast to run at an above-trend rate over the coming quarters, the consensus believes labor markets will continue to tighten, lifting the rate of growth in wages and salaries and pushing the unemployment rate to its lowest level since 2007

 The consensus forecasts improved for the Eurozone and most markets in Europe as well as for India, which is expected to now post real GDP growth of 7.2% this year and 7.5% next year. The forecast for growth in Japan this year fell to 1%, while the 2015 GDP forecast for China held at 6.9%.

Blue Chip released its twice-a-year long-term forecast in March, and the consensus was only slightly less optimistic than in the October 2014 survey. The economists expect growth to slow gradually during the five years from 2017-21, from real U.S. GDP growth of 2.7% in ’17 to 2.3% in ’21. The five-year average is 2.5%, down from 2.6% in the October consensus.