In a new report, S&P estimates that U.S. GDP growth will decelerate in the second half.
“Overall, we expect GDP growth to be about 1.5% (quarter-over-quarter, annualized) in the second half of the year, softer than the 1.85% pace in the first half of the year,” they write in a press release.
They forecast 2012 GDP growth of 2.2% 2012 and 1.8% in 2013.
“Our expectation for the chances of another U.S. recession is about 20%-25%,” said S&P’s Deputy Chief Economist Beth Ann Bovino. “Chances of a quick turnaround are around 15%.”
Here’s S&P’s press release via Reuters:
S&P: U.S. GDP growth likely to slow in second-half 2012
Sept 21 – Recent jobs data were disappointing overall, showing softpotential for U.S. economic growth, said an article published today by Standard& Poor’s, titled “U.S. Economic Forecast: He’s Buying A Stairway To Heaven.” Weexpect U.S. GDP growth of just 2.2% this year and only 1.8% in 2013.
“Our expectation for the chances of another U.S. recession is about 20%-25%,” said Standard & Poor’s Deputy Chief Economist Beth Ann Bovino. “Chances of a quick turnaround are around 15%.”
The poor labour market continues to keep the recovery in slow gear, spurring Federal Reserve Chairman Ben Bernanke to take unprecedented action. After its September Federal Open Market Committee Meeting, the Fed extended its guidance on interest rates, saying that it will keep rates low until mid-2015. The Fed also initiated another round of quantitative easing, this time making the offer open-ended and tying it to labour market conditions.
“A strong economic recovery is likely a long ways away. Businesses have pulled back on hiring, with a monthly average of just 97,000 job gains over the past six months. That’s well below the 240,000-plus monthly job gains we saw in the winter,” said Ms. Bovino. “This gives us reason not to expect a revival in household spending any time soon.” Worries that taxes may jump next year if Congress doesn’t reach a compromise on the fiscal cliff will also keep people cautious this year.
For the more optimistic among us, there is some good news. “The housing market, which has been a drag on growth since 2005, may finally be helping–not hurting–the recovery,” said Ms. Bovino. “We expect residential investment to contribute to GDP growth in 2012, for the first time in seven years.” Even home prices, according to the S&P/Case-Shiller Home Price Index, may have found their bottom.
Overall, we expect GDP growth to be about 1.5% (quarter-over-quarter, annualized) in the second half of the year, softer than the 1.85% pace in the first half of the year. The global economic slowdown, plus poor visibility on how things will turn out politically both here and abroad, will likely keep this recovery at a crawl.
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