Among the many observations from the July NABE Business Survey is that gross domestic product (GDP) growth in the second quarter may have been as low as 2.1%. While this would not be a catastrophe, it would cause more anxiety about whether the U.S. economy has entirely pulled out of the Great Recession.
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Among National Association for Business Economics economists, one concern is that sales have stalled at many companies:
Sales growth was less widespread in the second quarter of 2015 than in the first quarter, following a similar slowdown three months ago. Only 46% of panelists in the July survey reported rising sales at their firms last quarter, compared to 49% in the April survey, and 54% in the January survey, which covered the fourth quarter of 2014.
A majority of survey panelists (59%) expects sales to rise during the third quarter of 2015. However, that share represents a decline from the 71% in April that expected second-quarter sales to increase.
Nearly as bad is a key measure of cost, and therefore margins:
Close to half of the panel (49%) anticipates wages will increase in the next three months (compared to 51% in the January survey and 46% in the April survey). Only 2% of respondents expect their firms to reduce wages and salaries in the next three months, similar to the 1% who held that view in the April survey.
That, in turn, may pressure margins. The forecast of sales also confirms the chance of that problem. Should that trend continue, combined with wage inflation, and the signs that point to profit contraction grow.
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The number of forecasts of sluggish growth has risen recently, with the most recent being comments from the White House that put GDP growth at 2% this year. Ongoing trends in adding jobs and expanding profits appear less and less likely for the balance of 2015.
Often, anxiety breeds anxiety as businesses and the government look toward the near-term future. If so, the cycle has started.
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