National Australia Bank's economics team has turned bearish on the near-term direction of the Australian economy, arguing that most key macro indicators are set to deteriorate in the second half of this year.In a report published on Wednesday by group chief economist Alan Oster, the NAB house view is that real average GDP growth will fall to 1.7 per cent this calendar year - much lower than the previous forecast of 2 per cent.Oster said in the report that the downgrade was prompted by evidence of continuing weak consumer demand in the June quarter and the results of NAB's Business Survey for May which found that trading conditions and profitability are weakening across most industries."Not surprisingly that produces a weaker labour market outcome for 2019 - with unemployment rising to around 5.3 per cent by year's end," Oster wrote in the report."There is some risk that should growth be this weak, unemployment could deteriorate further."NAB's revised growth and labour market forecasts suggest that the historically low rate of non-performing loans in the banking sector has reached an inflection point, with increasing numbers of mortgage borrowers likely to come under additional pressure servicing debt in second half of the year.Oster sees little prospect of household consumption recovering significantly over the next two years, despite the likely positive influence of cuts to official interest rates and income taxes."We forecast caution in the household sector will persist with slow income growth on the back of weak wage rises, high debt levels and some risk of negative "wealth effects" with the recent decline house prices," Oster wrote."We see consumption growth improving, but only slightly over the next few years with growth tracking around 2 per cent year on year."Oster's dim analysis of the economy's trajectory is at odds with the Reserve Bank's official view that the fundamentals remain sound.RBA governor Philip Lowe said after the June rate cut that the easing of monetary policy should not be construed as a response to a deteriorating outlook.However, Oster is less bullish and is forecasting the central bank may have to consider additional stimulatory action next year after another rate cut in July or August."We see the need for further monetary policy action in early 2020 - if not sooner," Oster observes."Thus, unlike the RBA, we do see the outlook as having deteriorated recently."However, we do agree with their assessment that other areas of policy need to lend a hand - especially fiscal and structural policy."The bleak economic data kept flowing yesterday after Oster published his revised forecasts, with a key measure of consumer sentiment showing further deterioration.The Westpac-Melbourne Institute Index of Consumer Sentiment dipped 0.6 per cent to 100.7 in June."This is a disappointing result given the cut in official interest rates this month and suggests deepening concerns about the economy have outweighed the initial boost from lower rates," Westpac's economics team said in a note."Responses over the survey week show a marked drop-off after the Reserve Bank's official rate."The Westpac economists said responses collected before