A top panel of economists on April 10 cut their forecast for US economic growth this year, citing a lower outlook for capital spending, residential investment and business inventories. The Blue Chip Economic Indicators panel of forecasters said they expect US gross domestic product to expand at a rate of 2.3 per cent in 2007, the slowest growth since 2002.The group in March had predicted growth at a rate of 2.5 per cent.

The panel also scaled back its expectations of how much inflation will slow, although inflation is expected to grow less rapidly in 2007 than any of the prior three years. Also of concern to the forecasters were signs that growth in the massive service sector was slowing. The year-over-year consensus forecast of real GDP growth in 2008 slipped 0.1 per centage point in April to 2.9 per cent, the first change in four months.

The panel forecast the unemployment rate this year at 4.7 per cent and for 2008 at 4.8 per cent, unchanged for a third straight month. The Labor Department on Friday said US employers added 180,000 new jobs in March and the unemployment rate fell to 4.4 per cent from 4.5 per cent in February, its lowest level since a matching 4.4 per cent in October. The Blue Chip survey was conducted before the jobs data was released.

With labor markets expected to remain reasonably tight and inflation a lingering concern, the economists predictions of Treasury bill rates continue to suggest little if any rate cuts from the Federal Reserve. However, 71 per cent of the forecasters said they believe the next move by the Fed will be an easing of monetary policy, while only 24 per cent of economists bet that a US recession would begin within the next 12 months.