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US economists bearish about America: survey

But they are more upbeat about their own firms’ outlook

(WASHINGTON) Leading business economists are growing more pessimistic about the health of the US economy, but are more upbeat about their own company’s prospects, according to a new survey.

The National Association for Business Economics (NABE) panel yesterday predicted a sharply lower pace of growth in the US gross domestic product (GDP) in the first half of this year, based on its latest quarterly industry survey.

About one in four panellists said that they expected GDP to grow by an annualised rate above 2 per cent in the first half, compared with more than three in five who forecast growth of 0-2 per cent.

One in 10 of the panellists said that they expected GDP to decline in the first six months.

‘This is a much gloomier outlook than respondents reported in previous surveys regarding either the first or second half of 2007,’ NABE said in a statement.

In last October’s survey, almost half of respondents forecast growth in the second half of 2007 of 2-4 per cent, and only one per cent expected GDP to decline.

‘The January NABE industry survey shows a striking dichotomy,’ said Ken Simonson, chief economist of Associated General Contractors of America.

‘Compared to the October survey, respondents are much gloomier about the outlook for the economy as a whole but are more upbeat about their own firms’ pricing, capital spending, and hiring plans,’ he added.

Despite a severe housing slump and tight credit conditions that are leading some analysts to warn of recession, the survey found that 42 per cent of firms plan to create more jobs in the first half, while only 17 per cent will cut jobs.

The hiring outlook was more positive than in the previous four quarters, and ‘an encouraging sign for an economy at risk’, NABE said. In the October survey, only 32 per cent of respondents had planned to increase payrolls, down a notch from the 33 per cent seen in last year’s January poll.

Panellists raised their capital spending plans for 2008. Half said that they expected to increase spending, up from 43 per cent in the October survey.

Expectations of price increases in the first quarter jumped, with 47 per cent planning to hike prices, compared with 33 per cent in October.

While nearly all respondents expected the housing slowdown to continue – and nearly half saw a further ‘substantial’ downturn – fewer than in October expected their business to be affected.

The survey of 98 NABE members was conducted between Dec 13 last year and Jan 9.

 

Source: AFP (Business Times 23 Jan 08)

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