- THE MAGAZINE
The economy should manage to sidestep a renewed recession, helped by a half-percentage-point cut in interest rates from the Federal Reserve earlier this month, said economists surveyed by the National Association for Business Economics.
Political tensions linked with the Middle East -- including possible new attacks or a potential U.S. conflict with Iraq -- pose the greatest hazard to the economic outlook, according to one-third of the 33 analysts polled.
"Unresolved economic problems, specifically a hangover from the late 1990s investment bubble plus the need for families to rebuild their savings, are likely to keep U.S. growth below a 3 percent rate through the first quarter of 2003," NABE President Tim O'Neill said in a statement.
"Inflation risks remain minimal," O'Neill, who is also the chief economist for the BMO Financial Group, added.
The survey said growing evidence that the economy lost momentum in the last few weeks of the third quarter led analysts in the survey to trim growth expectations for the final three months of this year.
Economists now expect gross domestic product, total output within U.S. borders, to grow at a rate of just 1.4 percent in the fourth quarter, versus an expansion rate of 2.7 percent predicted for the same period in the survey two months ago.