U.S. GDP Growth and Hiring to Drop

Fresh in the heels off Cisco's disappointing news, Economists polled by Bloomberg say that U.S. growth forecasts and hiring will be smaller. New estimates are that GDP will grown just 2.55% (per year) in the 2nd half od 2010, down from the 2.8% pace projected last month.

In addition, estimates for household purchases will rise 2.25%, compared with the 2.6% previous forecast.

"Federal Reserve policy makers yesterday also lowered their sights on the projected speed of the economic rebound, prompting officials to take additional steps to bolster the economy for the first time in a year. Slack growth will push back the first increase in the central bank’s target interest rate until the second half of 2011, according to the Bloomberg survey".

"Consumer spending, which accounts for about 70 percent of the economy will grow 1.5 percent this year, down from a 2.4 percent gain forecast a month ago, according to the survey median estimate. In addition to the lowered expectations for the second half of 2010, the downgrade also reflects the annual GDP revisions issued by the Commerce Department last month".

Hiring

With regards to hiring: "After boosting payrolls by 200,000 workers on average in March and April, companies scaled back the pace of hiring to an average 51,000 over the past three months. The jobless rate held at 9.5 percent in July and reached a 26-year high of 10.1 percent in October".

"Joblessness will be slow to fall, signaling it will take years for the economy to recover the more than 8 million jobs lost during the recession that began in December 2007. Unemployment will average 9.6 percent in 2010 and 9.1 percent next year, according to the survey".

Read full report at Bloomberg.