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Economists cut growth projections for the U.S. economy and raised forecast unemployment rates, according to the latest Survey of Professional Forecasters released today by the Federal Reserve Bank of Philadelphia.
Real gross domestic product will grow only by an estimated 0.7% in the first quarter of this year, down from the previous estimate of 2.2%. The forecast for second-quarter real GDP growth fell to 1.3% from 2.3% in the previous report.
Forecasts for real GDP growth for the third and fourth quarters of 2008 remain unchanged from the previous report at 2.8%.
Economists in the survey also predicted unemployment will rise to 5.0% in the first quarter and 5.1% in the second increases from previous estimates of 4.8% and 4.9%, respectively.
In addition, the predicted jobless rates in the third and fourth quarters of 2008 rose to 5.2% from earlier forecasts of 5.0%
Economists also raised the chances of having a quarter with negative economic growth to 47.3% in the first quarter and 42.9% in the second. The risks have not been this high since the fourth quarter of 2001, according to the Federal Reserve Bank of Philadelphia.