Economists: 2nd half growth likely to be anemic

In the NABE survey, 75 percent reported paying more for raw materials, such as fuel and steel. 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, the survey found. That's up from the 29 percent who said their companies raised prices in the previous survey in April.

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."

Grappling with fallout from housing and credit troubles and stung by high costs for energy and other raw materials, employers have cut jobs in each of the first six months of this year. Over the next six months, 51 percent said they expected to hold payrolls steady. Twenty-nine percent expected to boost them and 20 percent thought jobs would be reduced through layoffs or attrition.

Caught between slow growth and rising prices, the Fed is likely to leave interest rates alone when they meet next on Aug. 5. Boosting rates to fend off inflation would deal a setback to the economy and further hurt the housing market. The Fed can't afford to lower rates more to shore up economic activity because that would make inflation worse.

Sixty-two percent said the Fed's nearly yearlong string of rate reductions and other steps to prop up financial markets, had no effect on their business.

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