Stocks Falling, US Economy Headed Into Recession
US economic growth in Q-2 will be far weaker than expected and it will prevent the pace of growth from exceeding last year’s 2.4%, according to a forecast by a group of US business economists.
Growth is expected to accelerate significantly in Q-3, but negative and sluggish conditions in Q-1 will persist into Q-2 and drag down average growth for the year, a survey by the National Association for Business Economists said Monday.
The survey of 47 economists from companies, trade associations and academia was conducted from May 8 to May 20.
A growing number of economists in the survey believe that the Fed will begin raising interest rates in Q-3. Many had expected a Q-2 increase until the year started off in the Red, some believe there will be no rate hike in 2015, and that the Fed will have to stimulate again, not tighten..
The labor market will improve at a slower rate, according to the survey, but headline job growth will remain OK. Economists now believe payrolls will grow by 217,000 per month in Y 2015, down from an earlier forecast of 251,000. Last year the economy added 260,000 jobs per month on average.
A stronger USD is dampening growth by making US goods more expensive overseas, and slower growth in China is also taking a toll on the US economy, according to the data.
The group’s forecast for US economic growth in Y 2015 fell to 2.4%, from 3.1% in March.
The US Fed also has revised its expectations for growth after a negative Q-1. It expects economic growth for the year to average between 2.3 and 2.7%, down from a range of 2.6 to 3.0% it projected in December.
The survey pointed to a number of positive economic indicators despite what it described as a “disappointing” start to Y 2015. The NABE panel expects consumer spending, residential investment and government expenditures to increase at a faster pace in both Y’s 2015 and 2016 compared with last year.
All of this remains to be seen, as it seem very optimistic Vs the reality.
Two negative Q’s running means recession, the Key reason for stocks falling into a Bear market. Pay attention, be nimble. Tune out the noise.
Stay tuned…
HeffX-LTN
Paul Ebeling
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