The U.S. economy is doing better after a sluggish first few months, but the growth overall this year will be only modest, forecasters say.
The U.S. economy got off to a slower start in the first part of the year than they had expected, but an uptick is now occurring, they say. Still, the sour first quarter will mean gross domestic product growth will not be as high as they had predicted to Pensions & Investments in December.
Another question is whether turmoil in China's stock markets and the Greek debt crisis could potentially dampen domestic economic growth and consumer confidence, several noted.
Eric Lascelles, chief economist with RBC Global Asset Management in Toronto, said one-off events drove U.S. GDP down in the quarter ended March 31 by 0.2%. Snowstorms on the East Coast and the port strike in Oakland, Calif., worked against economic growth. At the start of the year, Mr. Lascelles had predicted U.S. GDP growth of 3.2% for 2015. He now says the slow start means a growth rate of 2.5% this year.
“It's going to be a diminished year,” Mr. Lascelles said. He added in a later e-mail that the downgrade already accounted for what are not unexpected events in Greece and China.
“Keep in mind that Greek problems were clearly coming to a head this summer, while China has been on a downward economic trajectory for several years,” Mr. Lascelles said.
Despite only modest growth, the U.S. economy still is the brightest in the world, said economist A. Gary Shilling. He still believes U.S. GDP will grow only 2% in 2015, adding that it is better than Japan and Europe, where only 1% GDP growth is expected.
Mr. Shilling, president of A. Gary Shilling & Co. Inc., Springfield, N.J., agreed that the Bureau of Labor Statistics number showing the first-quarter GDP contraction won't be the trend for the rest of year, adding that the decline was an aberration due to one-off events.
Mr. Shilling said more jobs are being created and wage growth is starting, so he sees good news for the rest of the year.