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Washington: Call it the big fizzle. The hoped-for second-half US economic rebound is looking to be lethargic, with the country straining under high energy prices and fallout from the housing and credit debacles.
Forty-five per cent of economists believe the US economy won't log any growth or will clock in at a feeble one per cent pace in the final six months of this year, according to a survey released yesterday by the National Association for Business Economics (NABE). And, 10 per cent think economic activity could actually contract during the period.
"Forecasters are approaching the second half with a lot of caution," Ken Simonson, point person on the survey and chief economist for the Associated General Contractors of America, said in an interview.
"Most forecasters are suggesting the outlook will be sluggish, but not desperate. I'm afraid we're stuck on the ground floor of growth."
Thirty-two per cent, meanwhile, think the economy's growth during the second half could be between one and two per cent, which would mark a plodding performance.
The more bullish are clearly in the minority camp: 11 per cent think growth will come in between two and three per cent. Only one per cent expect growth to surpass three per cent.
The economy's growth slowed sharply in the final quarter of 2007 and remained stuck in a rut in the first quarter of this year.
Tax rebates, which have energised shoppers, should help lift the country out of the doldrums somewhat in the second quarter. The government releases its estimate of the second-quarter's economic performance at the end of this month.
However, as the bracing force of the rebates fade, some analysts fear the economy could hit another rough patch near the end of this year.
Stimulus
Earlier this year, many thought that the first half would be difficult and the second half would be stronger, lifted by the government's $168 billion stimulus, including tax rebates for people and tax breaks for businesses.
With the rebates kicking in earlier than some expected, the second half could turn sluggish. Many have "abandoned the notion of seeing a rebound," Simonson said.
Federal Reserve Chairman Ben Bernanke, who briefed Congress last Tuesday and Wednesday, warned that over the rest of this year, the economy will grow "appreciably below its trend rate" mostly because of continued weakness in housing markets, high energy prices and tight credit conditions.
Normal activity would be along the lines of a 2.5 per cent to three per cent growth rate for the economy.
Not only is the country slogging through lethargic growth, but it is also confronted by rising prices.
In the NABE survey, 75 per cent reported paying more for raw materials, such as fuel and steel. That's the highest percentage in record keeping going back to 1994. Those higher prices are squeezing profit margins and leading some firms - 35 per cent - to boost their prices, the survey found.
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