A survey released Monday by the National Association for Business Economics shows that its members expect the economy to grow 5.6% this year – down sharply from their previous estimate of 6.5%. The respondents projected the economy will grow by 3.5% in 2022.
"NABE Outlook survey panelists have moderated their expectations about the prospects for economic growth in 2021 since May," said David Altig, president-elect of the NABE and the director of research at the Federal Reserve Bank of Atlanta.
The economists are increasingly becoming more pessimistic about the growth outlook: More than half of respondents – 58% – said risks to the economy are skewed to the downside, compared to just 15% in May. Only 16% of respondents said the risks to the outlook are skewed to the upside, down strikingly from 56% in May.
Pandemic-related issues continue to dominate the list of potential risks: Nearly two-thirds of the economists said they viewed the emergence of vaccine-resistant variants of COVID-19 as the biggest threat, while 9% identified slowing vaccine uptake.
Another 9% said they were worried about the possibility of a "large fiscal program" as Democrats craft a massive $3.5 trillion spending bill, while 5% of respondents said the greatest downside risk is fiscal policy inaction or gridlock.
On the flip side, about 44% of respondents identified a faster vaccine rollout as the biggest upside risk to the economy, followed by an infrastructure spending package (14%) and stronger global growth (12%).
Other experts have also downgraded their forecasts as the U.S. dealt with a surge of COVID-19 cases, driven largely by the spread of the highly contagious delta variant. The OECD on Tuesday forecast that U.S. GDP would grow 6% in 2021. That's down nearly 1 percentage point from May, when the Paris-based organization predicted GDP would grow 6.9% this year.
While the U.S. was making solid progress with vaccinations — 76.5% of adults have received at least one shot, according to the Centers for Disease Control and Prevention — and infections began falling, cases rebounded over the summer.
The U.S. is averaging about 140,000 new COVID-19 cases per day with roughly 1,000 deaths, according to CDC data.
Although breakthrough infections in vaccinated people occur, they tend to be far less dangerous.