New York (CNN Business)Business economists are marking down their forecasts for US growth this year as the Delta variant takes a toll on the recovery, according to a survey released Monday.
The National Association for Business Economists said the panel of 47 economists it surveyed now expects US GDP growth of 5.6%. Although that's still strong, it marks a downgrade from May when business economists anticipated 6.7% growth. Economists also sharply cut their call for third-quarter growth to an annualized pace of 4%, down from 6.6% in May.
The downgrades reflect the damage from the Delta variant, which has slowed air travel, hotel reservations and office reopenings.
At the same time, economists are bracing for price spikes to continue at the end of this year. Consumer prices are expected to surge by 5.1% during the fourth quarter on a year-over-year basis, according to NABE. That's up sharply from a forecast for 2.8% inflation as of May and underscores the sticker shock Americans are experiencing in everything from used cars and gasoline to meat.
The good news is that business economists share the Federal Reserve's view that high inflation will prove to be temporary as the economy continues to adjust to Covid. Consumer prices inflation is expected to moderate to 2.4% by the fourth quarter of next year, NABE said.
The Fed made similar revisions to its own economist forecasts last week, downgrading its 2021 growth forecast while ramping up its inflation view for this year.
Winter is coming: European gas prices soar as demand peaks
Natural gas prices on the European market surged by more than 5% on Monday, hitting nearly $900 per 1,000 cubic meters, according to ICE futures trading data.
The price tag for the October futures contract on the TTF hub in the Netherlands reached $895.30, marking a growth of 5.4% against the levels reached at the end of last week.
European gas prices have been hitting record highs over the past month with the estimated price of October futures reaching a decade high of $963.90 on September 15.
The spike is being attributed to the approaching winter season and economic rebound from Covid-19 lockdowns across the world. This has reportedly boosted demand from households and businesses, while lower investment by global drillers is constraining output.
Last week, the CEO of Ukrainian state-controlled energy corporation Naftogaz accused Russia’s Gazprom of deliberately withholding gas supplies from Europe, thus manipulating the markets.
The Russian energy corporation says the surge in gas prices are the result of low reserves in European underground storage facilities ahead of the winter season. As of September 19, those reserves were reportedly only 72% full, which is nearly 14% lower than in the past five years.
Earlier this month, Germany’s energy ministry said Russia is fully compliant with its gas supply obligations to Europe, stressing there was no need for the state to intervene in the situation with gas prices.
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