US GDP Growth Forecasts Cut at JPMorgan

Aug. 19 (Bloomberg) -- The U.S. economy may expand less than previously thought in the next two quarters as consumer sentiment drops and the housing market fails to gain momentum, JPMorgan Chase & Co. wrote in a report.

Gross domestic product will grow 1 percent in the fourth quarter rather than the 2.5 percent previously forecast and 0.5 percent in the first quarter of 2012 instead of 1.5 percent, Michael Feroli, JPMorgan’s chief U.S. economist in New York, said in an e-mailed note to clients today.

Global stocks dropped today, European shares suffered their biggest two-day slump since 2008 and oil sank below $80 a barrel on concern the U.S. recovery is faltering and Europe’s debt crisis will worsen. Morgan Stanley earlier this week cut its forecast for global growth in 2011, and Citigroup Inc. lowered estimates for the world’s largest economy in a note dated yesterday.

“Growth in the current quarter looks only moderately softer than our previous projection,” Feroli said in today’s note. “Global growth has disappointed and foreign growth forecasts have been taken lower. Risks of a recession are clearly elevated.”