/www.bloomberg.com/ By Carlos Torres
Washington, March 10 (Bloomberg) -- Economists scaled back forecasts of 2003 U.S. economic growth for a second straight month as expectations waned for a rebound in consumer spending and inventory building, the latest Blue Chip Economic Indicators survey found.
The economy will probably expand 2.6 percent this year, down from the forecast of 2.7 percent that the survey found last month, according to the consensus of 54 economists. Gross domestic product grew 2.4 percent in 2002.
The outlook ``continued to deteriorate over the past month as surging energy prices, the likelihood of an imminent U.S. war with Iraq and severe winter weather caused many panel members to trim estimates of GDP in the first half of the year,'' the March report said.
Forecasts for first- and second-quarter growth were each slashed by 0.4 percentage point while estimates for the last six months of the year were little changed.
The U.S. economy, the world's biggest, is now expected to grow at a 2.2 percent annual rate from January to March and at 2.8 percent in the following three months. Growth is forecast at 3.6 percent in the third quarter, down from expectations of 3.7 percent last month, and the estimate for the fourth quarter was unchanged at 3.8 percent.
A second straight drop in auto sales and the biggest Northeast snowfall in seven years last month probably hurt retail sales and contributed to the lower expectations for spending. Households are expected to buy 2.1 percent more goods and services at an annual pace this quarter, down from a February forecast of a 2.4 percent increase. Consumer spending rose at a 1.5 percent annual rate in the last three months of 2002.
Friday Jobless Report
This month's Blue Chip survey was taken before the Labor Department issued its unemployment report Friday. That showed companies cut 308,000 jobs in February, the biggest decline since the aftermath of the Sept. 11 attacks, and the unemployment rate rose to 5.8 percent.
Inventories are projected to fall this quarter as the prospect of war prompts companies to turn more cautious, the report said. Stockpiles rose at a $24.7 billion annual pace and accounted for 0.24 percentage point of last quarter's 1.4 percent growth rate.
The economists projected business investment would rise at a 3.4 percent annual pace this year, the same as last month's estimate.
Economists at Genetski.com had the most optimistic forecast for growth this year at 3.8 percent. That was down from their 4.1 percent forecast last month. Daiwa Institute of Research America and Georgia State University were the most pessimistic at 1.7 percent. That was an improvement for Daiwa, which last month had forecast the economy would grow 1.4 percent in 2003.