By Vicki Needham - 07/11/14 05:35 PM EDT
Business economists have lowered their estimates for economic growth in the second quarter following news of a significant contraction during the first three months of the year.
The April to June forecast fell to 3 percent from a 3.5 annual rate in June, according to a special survey released Friday by the National Association for Business Economics (NABE).
Still, the economists are relatively upbeat about growth for the rest of the year and they don't foresee a recession for this year or next.
“Notwithstanding the difficult start to the year, opinion is widespread that the economy is on solid footing,” said Timothy Gill, outlook survey chairman and deputy chief economist at the National Electrical Manufacturers Association.
Many economists say that the first-quarter contraction was largely due to temporary factors such as severe winter weather that cut into consumer spending. Business inventories also slowed along with exports.
Some analysts have said that the first-quarter figure may eventually be revised to show a slightly better performance.
But the economists also expect slower growth for the year, down to 1.6 percent from the 2.5 expected in the last quarterly survey, as that January-March result weighs heavily on the year’s economic expansion.
Consumer spending is supposed to be slower than expected, too, mostly because of the anemic 1 percent level in the first quarter.
Spending is forecast to grow at a 2.3 percent annual rate instead of the 2.9 estimate in June.
Meanwhile, exports, which fell sharply in the first quarter but have picked since, are expected to rise at a 2.5 percent rate for the year down from the 3 percent expected in June's survey.
Jack Kleinhenz, president of the NABE and chief economist at the National Retail Federation, said despite the fall in expectations for growth, spending and exports, there are other signs that the economy is poised for continued expansion.
Employers added 288,000 jobs in June, the first time since 1999 that job creation eclipsed 200,000 for five straight months.