Macroeconomic Forecasts Steady As Good Data Overcomes Fear

The consensus forecasts of economic growth in the U.S. righted themselves in early March, according to the latest Blue Chip Economic Indicators. The rebound of equities markets and an upward revision of growth of gross domestic product in the fourth quarter were among the factors that led the 50 economic forecasting groups polled by Blue Chip each month to hold their forecast of real GDP growth in the U.S. to 2.1% this year. The forecasts for growth of real personal disposable income and personal consumption spending, two indicators most important to foodservice, also remained steady at 2.9% and 2.7% respectively. The forecast for real DP growth in 2017 remained at 2.4%.

The economists expect continued growth of employment and a gradual decline of the unemployment rate, which currently stands at 4.9%. They expect the latter to reach 4.6% by the fourth quarter of 2016.

While the outlook in the U.S. economy steadied, the economists were more pessimistic about growth trends in most of the world’s major economies. The consensus forecast for growth in the Eurozone was revised down to 1.6% as the GDP forecasts for both Germany and France were cut. The economists also lowered growth forecasts for Japan, Canada, Mexico, all four of the Asian tigers, the United Kingdom and the Netherlands. The forecasts for China and India remained at 6.4% and 7.5% respectively. The recessions in Brazil and Russia are also expected to be worse this year than previously forecast.

Blue Chip also released new long-term forecasts. The new forecast for growth of real GDP in 2018 is now 2.2%, down from 2.4% in the October 2015 forecast and the forecast for real GDP growth in 2019 was cut to 2.1% from 2,2%. Real disposable personal income is expected to growth 2.6% in 2018 and then plateau at 2.4% for the next four years.