WASHINGTON – Faced with a fizzling job market, many economists have turned more pessimistic and no longer think U.S. economic growth will accelerate later this year.
Friday’s surprisingly bleak jobs report for May followed a spate of weak U.S. economic data last week. Manufacturing activity slowed, an index of home contracts fell and consumer confidence tumbled. Mounting troubles in Europe and elsewhere have heightened economists’ concerns.
Julia Coronado, an economist at BNP Paribas in New York, said she now expects growth of 2.2 percent this year, down from her previous forecast of 2.4 percent. She also revised down her estimate of growth in the April-June quarter to a 2.2 percent annual rate, from a 2.5 percent rate.
“We keep hoping that we’re going to turn a corner and move into a stronger phase of recovery, and the door keeps getting slammed shut,” Coronado said.
After the jobs report Friday, JPMorgan Chase sharply reduced its growth forecast for the July-September quarter to a 2 percent annual rate, down from 3 percent. The U.S. economy looks set to deliver a repeat performance in 2012: For the third straight year, it may suffer a swoon yet not slip into a recession. As a general rule, it takes about 2.5 percent growth to generate enough hiring to keep up with population growth and prevent the unemployment rate from rising. The reduced forecasts suggest that hiring may not strengthen much this year.
“I don’t think the slowdown will be any more consequential than the past two years,” said John Ryding, a former Federal Reserve researcher who is chief economist at RDQ Economics. “There are positives out there in the economy. We’ll avoid a recession.”
Bloomberg News contributed to this report.
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