U.S. Economy May Slow as Rates, Gasoline Costs Pinch Consumers
uly 11 (Bloomberg) -- Rising interest rates and persistently high gasoline prices will pinch consumer spending more than previously estimated, weakening the U.S. economy for the rest of the year, according to the latest monthly survey by Bloomberg News. Gross domestic product, the sum of all goods and services produced in the country, will expand at an annual rate of 2.9 percent this quarter and 2.8 percent in the last three months of 2006, according to the median forecast of 51 economists surveyed from June 30 through July 10. Forecast rates for both quarters are down a 10th of a percentage point from last month's median.
US Federal Reserve policy makers will now need to raise their target rate again this quarter and hold it there for the rest of the year to prevent the jump in fuel costs from stoking inflation, according to the survey. A cooler housing market will add to the list of consumer woes.
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