U.S. Economy to Grow by Least Since 2012

The US economic growth will slow down in 2016, according to a survey of forecasters by the National Association for Business Economics. The association sees the economy slacken to its slowest pace in almost four years as uncertainty about the November presidential election weighs on growth.

The gross domestic product is projected to expand 1.9 percent this year on a fourth quarter-to-fourth quarter basis, which is down from 2.5 percent in the previous survey.  While about sixty percent of the forecasters believe uncertainty surrounding the November election will hurt the economy.

“If I’m an owner of a medium-sized business and I’m hearing very rattling news about the election, on the margin I’ll be a little more cautious about hiring or making an investment,” said Lisa Emsbo-Mattingly, president of NABE.

Also, corporate profits are forecast to plunge this year for the first time in five years, when they declined 2.9 percent, according to the association report. The NABE panel sees a 2 percent drop in after-tax profits without inventory valuation and capital consumption adjustments after a 3.3 percent advance last year.

“The biggest factor behind the markdown in the 2016 outlook is weak business investment. Spending on equipment, structures and intellectual property is projected to stall in 2016, after expanding 2.8 percent last year,” added Emsbo-Mattingly, who is also director of research for asset allocation for Fidelity Investments in Boston.

The panel projects the economy will gain ground in 2017, with gross domestic product growing at 2.3 percent, according to the median forecast. Profits are also forecast to recover and surge by 3.9 percent in 2017.