Blue Chip Economists Cut 2016 U.S. GDP Forecast, But Not Key Foodservice Indicators

The 50 major economic forecasting groups surveyed monthly by Blue Chip Economic Indicators got a case of the “glums” in their most recent monthly macroeconomic forecasts, released February 10. The consensus forecast for growth of real gross domestic product in the U.S. in 2016 dropped by 0.4 point to only 2.1%, a performance that would put 2016 real growth below both 2014 and 2015 during which real GDP increased an estimated 2.4%.But while the forecast for GDP growth fell sharply, those for indicators more indicative of foodservice spending trends were changed hardly a whit.

As Randy Moore, executive editor at Blue Chip put it, “Contributing to increased pessimism about economic growth this year are the weakness of economic growth in the final quarter of last year; early signs that the softness persisted as the new year began, especially in the all-important services sector; recent sharp losses in the equity markets; stress in the high-yield debt market; the strength of the U.S. dollar; continued excesses in private inventory levels; a further plunge in oil prices; and the persistence of soft economic growth abroad.”

But Moore also noted that the consensus forecast for real personal consumption expenditures (read consumer spending) remains at a “still solid” 2.7%, down only 0.1 point from the December consensus. That projected spending is supported by forecast real growth of disposable personal income of 2.9% in ’16, a number that has been unchanged the past three months. Consumer spending and disposable income are the key macroeconomic foodservice indicators along with employment trends. The Blue Chippers forecast average monthly job gains exceeding 182,000 a month this year, slower than 2015 but still quite robust.

The economists also cut their GDP forecast for many of the world’s major economies in the February survey, including both Canada and Mexico. They left forecasts for China, the Eurozone and Germany, and Australia unchanged. The outlooks for Russia and Brazil were cut further. Both are in full recession.