The nation’s business economists are slightly less optimistic about growth prospects over the next year, noting a number of threats ranging from higher-than-expected inflation to lingering disruptions from COVID-19 and snarled supply chains.
The National Association for Business Economics released a new report Monday that found 66% of NABE members responding to a survey expect the economy to grow by 3% to 5.9% over the next year while 28% were less optimistic, pegging growth over the next year at a far slower 0.1% to 2.9%.
That result represented a downgrade from the previous survey in July which had found an identical 66% who believed growth would be 3% to 5.9% but 20% of those surveyed expected growth to come in at an even stronger 6% to 8.9%. In the new survey, no NABE member saw growth higher than the 3% to 5.9% range over the next year.
The NABE forecast for GDP over the next year is generally in line with the expectations of many private forecasting firms.
The government on Thursday will release its first look at economic growth, as measured by the gross domestic product, for the July-September quarter. Economists are forecasting GDP grew at an annual rate of around 3% in the third quarter, a marked slowdown from growth rates of 6.1% in the first quarter and 6.7% in the second quarter.
The slowdown has been attributed to a surge in cases from the delta variant over the summer and supply chain problems, which disrupted manufacturing output in many sectors, especially auto production and helped send consumer prices rising at the fastest pace in 13 years.
The NABE survey found 33% of those responding saw increased cost pressures as the biggest risk to their company’s outlook followed closely by 28% of NABE survey respondents who saw the possibility of higher COVID-19 cases as the biggest threat. Twenty percent saw further problems with supply chains as the biggest threat.
On the other side, 31% of the business economists saw an improving coronavirus outlook as offering the biggest potential for stronger growth than they are forecasting, followed by 26% who saw faster improvements in the supply chain problems as offering the biggest upside potential.
The NABE survey found that 47% of the survey group indicated their companies were experiencing worker shortages, up from 39% in July. None of the NABE survey members felt these labor shortages would be resolved by the end of this year but 36% felt the labor situation will improve in 2022 while 14% said the labor shortages would still be around in 2023 or even later.
In terms of the supply chain problems, half of those surveyed said their companies were experiencing delays or shortages in receiving materials, up from 40% in the July survey.
Two-thirds of the NABE survey group, 65%, reported that sales had increased at their firms in the third quarter, down slightly from the 66% who had reported rising sales in the second quarter.
“It is clear that the finance, insurance and real estate sectors experienced a strong third quarter according to survey respondents while the transportation, utilities, information and communication sectors suffered the largest deterioration across the board,” said Eugenio J. Alemán, chief economist at the Energy Information Administration and the chair of the NABE business conditions survey.
The NABE survey represented responses from 91 NABE members to the survey conducted Oct. 6-14.