Economists foresee more Fed activityNews added by ProWEB Media on August 10, 2010
Gary Linnell

ProWEB Media

Joined: December 27, 2005

The economic recovery will falter without government support and increased action by the Federal Reserve to help boost growth, according to the monthly Blue Chip poll of leading economists.

The poll found that nearly 70 percent of respondents had lowered their economic growth forecasts during the past month.

Currently, the consensus anticipates gross domestic product to expand at just a 2.4 percent pace during the third quarter, down from a July forecast of 2.7 percent. Meanwhile, for the fourth quarter, economists expect a growth rate of 2.7 percent, down from 2.8 percent the month before.

According to Blue Chip, "Waning federal fiscal stimulus and smaller contributions to growth from business inventories are widely expected to weigh on GDP growth going forward."

The majority of those who reduced their second-half forecasts listed lower consumer spending as the primary culprit.

Approximately 55 percent of respondents believe the Fed will take additional steps to bolster the economy during the next 12 months, while 83 percent expect Congress to allow tax cuts to expire for those making $250,000 or more annually.
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