From the Wall Street Journal Online (subscription required):
U.S. economic growth is likely to slow this year to 3%, a pace slightly below its long-run average of 3.1%, according to a survey of chief executives released Monday.
An index on the economic outlook for the next six months has dropped to 82.4 from 98.6, reaching the lowest point in three years, according to the quarterly survey by the Business Roundtable, a group of CEOs from big corporations. The latest reading remains far above the threshold of 50 below which a contraction is expected...
The survey shows nearly three-quarters of corporate leaders expect their sales to increase over the next six months, while 17% foresee no change and 9% see a decrease. For capital spending 39% of those surveyed see an increase in the next six months, while half expect no change and 11% see a decline. For employment 32% anticipate growth, 39% see no change and 29% expect a decline.
Unfortunately, the survey has only been conducted since 2002, so we don't really know what these CEOs were telling us, in let's say mid-2000, as the economy was about to drop off the cliff. And I have to wonder about a forecast in which over half the respondents expect both investment spending and employment to stall or decline. (I also wonder what question the CEOs are really answering. Is that the absolute level of capital spending and employment they are talking about? Or capital spending and employment relative to current plans?)
Nonetheless, if you give me 3% growth, I will definitely be a satisfied customer.
UPDATE: Nouriel is having none of it.
UPDATE II: From the official weblog of the National Association for Business Economists:
Below-trend growth during the second half of 2006 is the dominant feature in the near-term outlook. GDP growth is expected to remain subdued over the second half of 2006, averaging just 2.6%. On a fourth quarter-over-fourth quarter basis, real GDP growth in 2006 is expected at 3.3%, down from 3.5% in the May survey. Solid gains in consumer spending — albeit restrained by high energy prices — and nonresidential fixed investment are expected to be offset by drag from declining new home construction.
UPDATE III: Today's data helps Nouriel's case. From The Nattering Naybob Chronicles:
August PPI +0.1% Full Report..
Ugly truth: the drop was led by -2.6% new car prices, -3.4% light motor truck prices & -0.3% capital equipment. NOT a good picture for manufacturing and durable economic activity...
August Housing Starts -6% @ 1.665M Full Report
Inside the number: the lowest since April 2003. falling in 6 of the past 7 months.
August Building Permits -2.3% @ 1.722M
Inside the number: the lowest since August 2002. July Building permits revised lower -3.3%; falling 7 months in a row.