Friday’s surprisingly bleak jobs report for May followed a spate of weak U.S. economic data last week. Manufacturing activity slowed, an index of home contracts fell and consumer confidence tumbled. Mounting troubles in Europe and elsewhere have heightened economists’ concerns.
Julia Coronado, an economist at BNP Paribas in New York, said she now expects growth of 2.2 percent this year, down from her previous forecast of 2.4 percent. She also revised down her estimate of growth in the April-June quarter to a 2.2 percent annual rate, from a 2.5 percent rate.
“We keep hoping that we’re going to turn a corner and move into a stronger phase of recovery, and the door keeps getting slammed shut,” Coronado said.
After the jobs report Friday, JPMorgan Chase sharply reduced its growth forecast for the July-September quarter to a 2 percent annual rate, down from 3 percent. It cited the weaker U.S. hiring and a likely drop in U.S. exports related to slower growth overseas.
And JPMorgan Chase now forecasts growth of 2.1 percent for 2012, down from 2.3 percent.
Forecasting firm Macroeconomic Advisers and Swiss bank UBS have also marked down their expectations since Friday’s jobs report.
As a general rule, it takes about 2.5 percent growth to generate enough hiring to keep up with population growth and prevent the unemployment rate from rising. The reduced forecasts suggest that hiring may not strengthen much this year.
After months of fitful expansion since the recession ended three years ago, many analysts had expected the economy to begin strengthening steadily.