NEW YORK -- Many business economists expect modest economic growth for the rest of the year, with only a small percentage taking a more bullish outlook, according to a new survey.
Four-fifths of the experts surveyed by the National Association of Business Economics expect fourth-quarter growth of at least 2 percent. But only 7 percent predicted growth will top 3 percent, down from the 16 percent who held that optimistic view in July.
Expectations are declining for fourth-quarter wages and employment, said Jim Diffley, senior director at consulting firm IHS Inc. and chairman of the survey.
Only 29 percent of those surveyed expect their company to add jobs in the next three months, the lowest rate this year, according to the survey released Monday. But half of the economists said their firms had trouble filling some jobs, and one-third continued to say their companies face a shortage of skilled workers.
On pay, 44 percent expect their companies to increase wages, the weakest outlook since a survey one year ago. In the last quarter, a third of the firms in the survey raised pay, down from more than 40 percent in each of the previous two quarters.
The group surveyed 106 economists between Sept. 21 and Oct. 6.
Most of the economists said the slowdown in China's growth and the strong U.S. dollar aren't affecting their companies. Lower oil prices have helped nearly one-third of the companies and hurt about one-fifth.
The group split on whether an interest-rate increase by the Federal Reserve would make much difference to their companies.
Some economists are suggesting that the best thing the Fed could do for the U.S. economy would be to raise interest rates for the first time in nearly a decade, mounting an argument that flies in the face of conventional economic wisdom.
Tightening, in light of the current circumstances, would actually be stimulative, on net, they argue.
"The reason [the Fed] should have raised rates in September and the reason, failing that, that it should do so this month isn't that the economy can handle the pain but rather that it could do with the help," David Kelly, chief global strategist at JPMorgan Asset Management, wrote in a recent research note.
Slightly more than half of the economists surveyed said sales rose at their companies in the third quarter and expect sales to grow again in the fourth quarter. Profit margins shrank at 22 percent of the companies and grew at 29 percent. In the group's July survey, margins narrowed at only 14 percent of companies while they grew at 32 percent.
The U.S. economy is slowing too much and needs to improve, said former International Business Machines executive Louis Gerstner Jr., citing the 2 percent estimate for the year. That kind of pace isn't "good enough to solve the economic and social problems we have in this country," he said.
Global overcapacity in industries such as automobiles and steel is hurting the U.S., while other industries such as construction are doing well because of improved consumer confidence, he said. The strong dollar is also hurting multinational companies' revenue and making it tougher to compete, he said.
"We clearly haven't been able to get the total economy going," Gerstner said.
Information for this article was contributed by The Associated Press and by Luke Kawa and Scott Lanman of Bloomberg News.
Business on 10/27/2015