Business economists lower growth forecasts due to virus

The nation’s business economists now expect slower economic growth this year due to the widespread delta variant of the coronavirus, while also saying the economy could improve more quickly next year as vaccinations become more accepted.

In a survey being released Monday, the National Association of Business Economists found that its panel now expects full-year economic growth of 5.6%, down from a forecast for 6.7% growth in NABE’s previous survey in May. However, economists raised their forecast for 2022 economic growth to 3.5% from a previous outlook of 2.8%.

The NABE’s findings are based on the responses of 47 forecasters earlier this month.

Inflation should remain at elevated levels through the fourth quarter before moderating next year, the panelists predict. Consumers have faced sharply higher prices for goods and services this year as businesses deal with an unprecedented jump in wholesale prices.

While NABE’s survey now sees inflation coming in this year at a hot 5.1% year-over-year, economists appear to believe the higher prices will mostly prove to be temporary. Inflation is expected to moderate next year to a level of 2.4%.

The coronavirus remains the dominant variable around how the U.S. economy will do for the rest of the year and into 2022, according to NABE. Roughly two-thirds of those surveyed see a potential vaccine-resistant version of the coronavirus being the biggest risk to the economy. A faster rollout of vaccines, however, would provide the biggest upside to the economy this year and next year, roughly half of the panelists said.

NABE’s panelists were split on the issue of there being a potential labor shortage. About 44% of panelists said their companies were not experiencing any labor shortages or issues, while 35% said they were seeing a labor shortage. One in five panelists did not know or was unsure.