Only mild pick-up for U.S. economy next year: poll
The U.S. economy is expected to remain sluggish next year, despite widespread expectations for more monetary stimulus from the Federal Reserve later on Wednesday, a Reuters poll showed.
Most consensus forecasts for the first half of 2013 were downgraded to their lowest since Reuters began polling for this period more than a year ago. The forecast for the current quarter was slashed again.
That underscores a very fragile world economic outlook, given sharp slowdowns in many big emerging economies such as Brazil and India and only a tentative sign of re-emergence of China's economic growth engine.
"Too much of the global economy is stumbling to support export demand," said Carl Riccadonna, senior U.S. economist at Deutsche Bank. "It's Europe, it's recession in Japan, (and) softer growth out of China for much of the year."
"(U.S.) exports are likely to pose a drag on growth in the current quarter, which is something we haven't see since the collapse in trade during the recession," he said.
Much depends on whether politicians can sort out a deal to avoid the "fiscal cliff", a series of automatic tax hikes and spending cuts next year. Uncertainty around that has already damaged business confidence and curtailed hiring.
Indeed, the poll showed growth is expected to have slowed to just 1.2 percent on an annualised basis in the quarter that ends this month, down sharply from 1.6 percent in the November poll, and well below the economy's potential.
Weak exports have dragged on growth, not to mention superstorm Sandy, which hit the U.S. east coast in October and shut down most of New York City and surrounding area for days, damaging business and infrastructure.
The outlook for all of 2013 has been chopped to 1.9 percent, far below the Fed's September prediction of 2.5-3.0 percent, and also the lowest consensus for 2013 polled so far this year.