NEW YORK/BANGALORE - The US economy is expected to remain sluggish next year, despite widespread expectations for more monetary stimulus from the Federal Reserve later on Wednesday, a Reuters poll showed.
Most consensus forecasts for the first half of 2013 were downgraded to their lowest since Reuters began polling for this period more than a year ago. The forecast for the current quarter was slashed again.
That underscores a very fragile world economic outlook, given sharp slowdowns in many big emerging economies such as Brazil and India and only a tentative sign of re-emergence of China's economic growth engine.
"Too much of the global economy is stumbling to support export demand," said Carl Riccadonna, senior US economist at Deutsche Bank. "It's Europe, it's recession in Japan, (and) softer growth out of China for much of the year."
"(US) exports are likely to pose a drag on growth in the current quarter, which is something we haven't see since the collapse in trade during the recession," he said.
Much depends on whether politicians can sort out a deal to avoid the "fiscal cliff," a series of automatic tax hikes and spending cuts next year. Uncertainty around that has already damaged business confidence and curtailed hiring.