Magazine article Mortgage Banking

Forecasters Downshift 2005 Economic Growth Outlook

Magazine article Mortgage Banking

Forecasters Downshift 2005 Economic Growth Outlook

Article excerpt

EXPECT TO SEE SLOWER ECONOMIC GROWTH during the first six months of 2005, but growth prospects are likely to improve over the second half of the year, according to a survey of 46 forecasters polled by the Federal Reserve Bank of Philadelphia.

The Philadelphia Fed's second-quarter forecast survey predicted real gross domestic product (GDP) growth to average 3.4 percent on a year-over-year basis in 2005, a downward revision from the previous estimate of 3.6 percent three months earlier.

Why the change? The forecasters over-estimated the strength of growth in the first quarter, and have now marked down their projection for second-quarter growth to 3 percent (annual rate) from 3.7 percent in the previous quarterly survey, according to the Philadelphia Fed.

The forecasters see growth of 3.5 percent in the third quarter, up from their previous projection of 3.3 percent, and 3.4 percent in the fourth quarter. Their forecast now calls for 3.3 percent growth in 2006, down slightly from their previous estimate of 3.4 percent.

"Despite their call for slower growth over the first half of the year, the forecasters see less chance of an outright down-turn," noted the survey. …

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