Reduction in growth estimates for U.S economy

National Association of Business Economists (NABE) latest consensus forecast has downgraded their estimates for growth of U.S. economy for the second quarter from 3.5% to 3%. One of the factors cited for the slowdown is slower than expected consumer spending, which is forecast to grow about 2% vs. prior estimates of about 3%. Growth in exports in Q2 is also expected to be slower than expected at about 2.5% vs. previous estimates of 3%.  

What’s the point? We continue to believe economic growth will accelerate in 2H-14. What is interesting is the downgrade in forecast for consumer spending. We think this is part and parcel of what has been dubbed “the new normal” economy, a euphemism for a slow growth economy led by a secular decline in growth rate of consumer spending. Aside from what you want to call it, we believe the “new normal” for consumer spending is real due to demographic changes, slower job  and wage growth, slower growth in government spending. Areas of the economy that should continue to grow at a stronger pace are productivity investments, technology spending, and business and industrial capital spending, all of which we think can grow at or over twice the pace of the overall economy.  

Link: http://money.msn.com/business-news/article.aspx?feed=AP&date=20140711&id=17767636