Rising interest rates and persistently high gasoline prices will pinch consumer spending more than estimated, weakening the U.S. economy for the rest of the year, according to a monthly survey by Bloomberg News.
Gross domestic product 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 Monday.
Forecast rates for both quarters are down a 10th of a percentage point from last month’s median.
Federal Reserve policymakers will now need to raise their target rate again this quarter and hold it there for the rest of 2006 to prevent this year’s 35 percent jump in gasoline costs from stoking inflation, according to the survey.
A cooler housing market will add to the list of consumer woes.
