Friday's upbeat jobs report changed few experts' minds about the likelihood of
an economic slowdown in mid-2013, according to a USA TODAY survey of economists.
Only four of 37 economists surveyed say the jobs report reduced their fears that growth will suffer a sharp slowdown in the second and third quarters this year. More than half say that hadn't been a concern of theirs before the report.
The Labor Department said the economy added 165,000 jobs in April, after an initial report for March estimated only 88,000. The March number was also revised up last week -- to 138,000.
The economy's growth rate will slow from the 2.5% annual rate the government reported for the first quarter -- possibly to as low as 1.3%, Bank of America Merrill Lynch economist Ethan Harris says. The culprit is Washington's campaign to cut the federal deficit, which resulted in tax increases and spending cuts this year, he says.
"The data show a slowing economy but not an alarming slowdown," says Harris, who forecasts that growth will rebound to 2.5% by the fourth quarter. "The underlying growth in the private-sector economy is actually improving."
A third of the economists, 12, say they're still worried about "a sharp slowdown of the economy in coming months."
But many economists do expect a modest midyear slowdown, says Mike Englund, chief economist at Action Economics, who expects 2% second-quarter growth.
Nearly all the economists say the government's austerity programs are costing jobs. The experts' median estimate is that U.S. employers will add an average 171,000 jobs a month for the rest of the year, but average gains would be 190,000 a month without the spending cuts. The unemployment rate, now 7.5%, will dip to 7.3% by year's end.
"There will be a spring swoon, and it's mostly about the sequester," said Nariman Behravesh, chief economist at consulting firm IHS. "The hardest hit will be in the second quarter."
The jobs report was less bullish than it seemed because it showed the average workweek declining and almost no wage growth, Harris said.
But JPMorgan Chase senior economist Robert Mellman said the report slowed a surge of bearish sentiment that cropped up after other data for March and April began to signal a slowdown.
"There was concern that the slowdown might be abrupt, and now it seems it won't be," said Mellman, who says the economy will grow at a 1.5% annual rate this quarter, before climbing back to 2.5% by late this year. "With sequestration and tight fiscal policy, and weakness in exports, it's hard to grow more than 2.5."
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