Business economists are marking down their forecasts for US growth this year as the Delta variant takes a toll on the recovery, according to a survey released Monday.
The National Association for Business Economists said the panel of 47 economists it surveyed now expects US GDP growth of 5.6%. Although that’s still strong, it marks a downgrade from May when business economists anticipated 6.7% growth. Economists also sharply cut their call for third-quarter growth to an annualized pace of 4%, down from 6.6% in May.
The downgrades reflect the damage from the Delta variant, which has slowed air travel, hotel reservations and office reopenings.
At the same time, economists are bracing for price spikes to continue at the end of this year. Consumer prices are expected to surge by 5.1% during the fourth quarter on a year-over-year basis, according to NABE. That’s up sharply from a forecast for 2.8% inflation as of May and underscores the sticker shock Americans are experiencing in everything from used cars and gasoline to meat.
The good news is that business economists share the Federal Reserve’s view that high inflation will prove to be temporary as the economy continues to adjust to Covid. Consumer prices inflation is expected to moderate to 2.4% by the fourth quarter of next year, NABE said.
The Fed made similar revisions to its own economist forecasts last week, downgrading its 2021 growth forecast while ramping up its inflation view for this year.