Economists are dialing back their expectations for U.S. economic growth this year.
A survey from the National Association for Business Economics predicts GDP will grow 2.8 percent this year — down from the group's February prediction that it would grow 3.3 percent. Their outlook for consumer spending and the housing market also weakened, in part because they expect oil prices to remain above $100 a barrel through 2012.
In a survey that the NABE releases Monday, a panel of 41 economists also said they "remain highly concerned" about the growing federal deficit, and said that growth in the first three months of the year had been weaker than expected.
The predictions of the economists reflect the jitteriness of a public that is still recovering from the financial crisis and now getting squeezed by rising prices for gas, groceries and other household items. Retailers of all stripes are paying more for the raw materials they need to make and transport their products, such as fuel, cotton and wood pulp, and saying they have no choice but to pass along the price increases to customers.
The NABE's outlook survey is released every quarter. For this report, the poll was conducted April 13 to May 1. For the last report, released in February, the economists were polled Jan. 25 to Feb. 9. Since then, unrest has spread in parts of the Middle East and North Africa, which has played a role in the higher prices for raw materials and gas.
The economists said they expect GDP to grow at 2.8 percent in 2011 - a decrease from the 3.3 percent prediction they made when surveyed in late January and early February. They also lowered predictions for consumer spending growth this year (2.8 percent, down from 3.2 percent), and housing starts (610,000, down from 660,000). They also expect housing prices to fall 1.5 percent, after saying earlier that they would rise 0.4 percent.
Oil will average $105 per barrel this year, the economists said, up from $93 predicted in the last survey. They expect oil prices to remain elevated at $103 a barrel through 2012.
Oil closed at $99.65 a barrel on Friday. A gallon of regular gas averaged $3.96 a gallon that day, according to AAA.
Business spending was the bright spot in the NABE predictions. The economists expect spending on business equipment and software to rise 11.9 percent this year, partly because of pent-up demand after businesses cut back on spending during the recession. Corporate profits will rise by 8.5 percent, they predict.