NEW YORK - The already sluggish U.S. economy probably weakened further in the third quarter and may slacken even more in the fourth, said Lacy Hunt, chief economist at HSBC Group, which owns Marine Midland Banks of Buffalo, N.Y.
"Significant risks continue to weigh on the economy, making circumstances very fragile," Mr. Hunt wrote in his weekly economic report.
He estimated a mere 1% growth in gross domestic product in the third quarter, after eliminating the effects of inflation. The Commerce Department's estimate for the second quarter was 1.5%.
The department is scheduled to release the preliminary estimate of third-quarter GDP on Oct. 27.
Mr. Hunt estimated fourth-quarter GDP growth at 0.6%, almost entirely because of reconstruction in Florida and Louisiana following Hurricane Andrew.
"Many regions of the country, and several critical industries, still face serious economic difficulties," Mr. Hunt said, singling out commercial construction, airlines, and exports.
Furthermore, "real long-term interest rates remain too high for a meaningful recovery in economic activity, and inflation-adjusted money and credit growth continue to contract."
Mr. Hunt noted that real M2 fell to its lowest level since June 1986, and bank loans, in real terms, fell every month this year through August.