The U.S. economy in 2014 is likely to record another disappointing year of growth, according to the latest Wall Street Journal survey of economists.
The main culprit cited by the 48 surveyed economists—not all of whom answered every question—is the absence of a big spring bounce following the winter's sharp contraction.
The July consensus view calls for inflation-adjusted gross domestic product to grow just 1.6% this year, measured as the percentage change from this year's fourth quarter over the fourth quarter of 2013.
That would represent a steep drop from the 2.2% expected just a month ago, and is off more than a percentage point from the 2.7% and 2.8% estimates made in the first five months of 2014. Real GDP grew 2.6% over the four quarters of 2013.
Economists now estimate the first quarter's deep contraction—2.9% at a seasonally adjusted annual rate, according to the Commerce Department—was followed by a softer-than-expected rebound.
The forecasters now estimate real GDP grew at an annual rate of 3.1% in the second quarter, down from the 3.5% gain projected in last month's survey. The consensus view sees growth of about 3% in the second half.
"We were flat-lining in the first half," said Diane Swonk of Mesirow Financial. "We are in another difficult year, instead of the 'lift-off' year we expected."
Along with the downgraded GDP forecast, a new caution emerged in the July survey. When asked about an upside or downside risk to their forecasts, the respondents were evenly split. That's a sea change from the results of the six previous months. In each of those surveys, about 3 out of 4 economists thought the risk was that the economy would grow faster than their forecasts expected.
One problem has been the unexpected sluggishness of consumers. The survey panel estimates real consumer spending grew at a 2.2% pace in the second quarter. That's better than the 1% pace in the first quarter but slower than the average quarterly gain for 2013.
The housing sector has also proven to be a disappointment. The Commerce Department reported Thursday that housing starts in June unexpectedly fell 9.3% to an annual pace of 893,000, the weakest in nine months.
The economists in the survey now think housing starts will total only 1.035 million in 2014. That projection is down from the 1.11 million forecast in January. In the panel's view, housing weakness is the second-biggest downside risk to 2014 growth, after possible negative international events.
Even now, global demand isn't as strong as U.S. spending. As a result, the trade deficit isn't narrowing as many forecasters expected earlier. The net export sector subtracted more than 1.5 percentage points from first-quarter GDP growth. The consensus view now estimates the deficit widened further in the second quarter, which will cut into top-line GDP again.
"Exports are growing but not strongly," said Allen Sinai of Decision Economics, "and more imports worsen net exports."
Slower growth, however, doesn't mean a weaker labor market. The average forecast expects nonfarm payrolls to increase by about 212,000 jobs per month in 2014. That would be the fastest hiring pace since 1999.
