Economists see a sluggish end to '08

45% in poll expect little or no growth

As the effect of tax rebates fades, some analysts fear the economy could hit another rough patch near the end of this year. Only 12 percent of economists in a survey predict growth of more than 2 percent in the last half of this year; some predict no growth. (Associated Press)

WASHINGTON - Call it the big fizzle. The hoped-for second-half economic rebound is looking to be lethargic, with the country straining under high energy prices and fallout from the housing and credit debacles.

Forty-five percent of economists in a survey say the US economy won't log any growth or will clock in at a feeble 1 percent pace in the final six months of this year. The survey is being released today by the National Association for Business Economics. Ten percent think economic activity could actually contract.

"Forecasters are approaching the second half with a lot of caution," said Ken Simonson, point person on the survey and chief economist for the Associated General Contractors of America. "Most forecasters are suggesting the outlook will be sluggish, but not desperate."

Thirty-two percent, meanwhile, say growth in the second half could be between 1 and 2 percent, which would mark a plodding performance. The more bullish are clearly in the minority: 11 percent think growth will come in between 2 and 3 percent. Only 1 percent expect growth to surpass 3 percent.

Normal activity would be along the lines of a 2.5 percent to 3 percent growth rate for the economy.

The economy's growth slowed sharply in the final quarter of 2007. Tax rebates, which have energized shoppers, should help lift the country out of the doldrums somewhat in the second quarter of 2008. The government releases its estimate of the second quarter's economic performance at the end of this month. However, as the effect of the rebates fades, some analysts fear the economy could hit another rough patch near the end of this year.

Earlier this year, many thought the first half would be difficult and the second half would be stronger, lifted by the government's $168 billion stimulus, including tax rebates for people and tax breaks for businesses. With the rebates kicking in earlier than some expected, the second half could turn sluggish.

Many have "abandoned the notion of seeing a rebound," Simonson said.

Not only is the country slogging through lethargic growth, it is also confronted by rising prices that threaten to spread inflation.

In the NABE survey, 75 percent reported paying more for raw materials. That's the highest percentage in record keeping going back to 1994. Those higher prices are squeezing profit margins and leading some firms - 35 percent - to boost their prices.

Consumer prices in June rose at the second-fastest pace in a quarter century, the government reported Wednesday. Wholesale prices also went up sharply during the month.

Meanwhile, most forecasters expect a continued slowdown in housing over the next six months, although they think it will be "mild" versus "substantial."

The survey, based on the responses of 101 NABE members, was conducted between June 19 and July 10.