WASHINGTON - Top forecasters say the economy will grow this year and next at a slower pace than previously thought, weakened by governments and consumers spending less so they can pay down debt.
That's the findings of a survey released Monday by the National Association of Business Economics.
The 46 economists polled tempered their expectations after seeing weak economic data in recent months. The panel reduced its forecast for annual economic growth to 2.6 percent in 2010 and 2011. That's down from its forecast of 3.2 percent in May.
The economists expect the economy will add jobs through the end of 2011, but not enough to bring down the unemployment rate below 9.2 percent. They don't see home prices rising much or the nation's soaring deficit falling much.
The mainly downbeat report comes as persistently high unemployment, weak consumer spending, and stagnant wages drag on the U.S. economy.
"This summer's slowdown has exposed the economy's sensitivity to wealth losses, the unwinding of debt, and the reductions in economic stimulus," NABE President-elect Richard Wobbekind said in a statement.
The NABE's Outlook survey is conducted four times per year. It compiles economists' big-picture expectations for factors such as growth, hiring, home prices, and spending. The economists work for industry groups, government agencies, banks, and economic analysis firms.
Consumer spending accounts for about 70 percent of economic activity. Economists told the NABE that consumer spending is likely to remain low over the next year, with families spurning retailers during the holiday shopping season.
The housing market also will struggle, the economists said. Home prices will not rise enough in 2011 to keep up with inflation, and housing starts will remain near record lows, they said.
Still, they expressed few concerns about inflation, deflation, or so-called stagflation - a dangerous mix of rising prices and slow economic growth.
The economists expected hiring to increase at a painfully slow rate. They predicted the economy will add 150,000 or fewer jobs each month until the middle of 2011, after which the numbers will improve to about 175,000. Only then will the jobless rate begin dropping, from 9.6 percent to 9.2 percent, the economists said.
There were a few bright spots. Economists expected businesses to increase spending on equipment and software as their profits keep rising. Spending by businesses has helped keep up demand for goods from American factories, a vital sector for the economic recovery.