WASHINGTON (AP) — A panel of economic forecasters says the U.S. economy will expand at a slower rate in 2015 compared to expectations outlined earlier this year, and that it could push the Fed to hold off longer on raising short-term interest rates.
The National Association for Business Economics’ June survey says real GDP growth is expected to reach only 2.4 percent this year, an estimate down from the 3.1 percent gain NABE panelists had predicted in March. They blame sluggish winter economic conditions that persisted into the second quarter.
NABE Outlook Survey Chair Timothy Gill says the latest “soft patch” has led to a shift in expectations on when the Federal Reserve will start to raise interest rates. Seventy-four percent of panelists now think a rate hike will come in the third quarter this year and 21 percent expect a hike in the fourth quarter.
The panel does foresee a fair share of positive economic news. Consumer outlays, residential investment and government expenditures are all expected to increase at a faster pace in both 2015 and 2016 compared to last year. Payrolls are expected to expand by more than 200,000 per month through the end of next year and inflation is expected to remain tame.