NEW YORK – The U.S. economy will improve this year and remain at that level next year as inflation ticks up and employment trends down, according to participants in the Federal Reserve Bank of Chicago automotive outlook symposium.
The consensus forecast sees real gross domestic product expects 3.1% growth this year and a similar increase next year. Inflation, as measured by the consumer price index is seen rising 0.2-percentage points a year, to 1.7% this year and 1.9% next.
The jobless rate, which averaged 10% in the final quarter of 2009 is seen dipping to 9.5% by year end and 8.8% by the end of 2011.
“Most of the major components of real GDP—particularly consumer spending and business fixed investment—are expected to contribute to the improved forecast for economic growth in 2010,” the Chicago Fed said in a statement. “Economic growth is forecasted to remain solid in 2011, in large part because of an expansion of spending in business fixed investment and residential investment. Industrial production is forecasted to increase at a strong pace in 2010 and then increase at a solid rate in 2011. Net exports are predicted to decline somewhat in 2010 and 2011. Car and light truck sales are projected to improve in 2010, with sales at 11.6 million units—the slowest selling rate since 1983; and they are expected to improve to 13.3 million units in 2011—the slowest rate since 1992. Interest rates (one- and ten-year Treasury rates) are anticipated to rise this year and next year. Oil prices are expected to average $82 per barrel by the end of 2010 and then rise to just under $88 per barrel by the end of 2011. The trade-weighted U.S. dollar is expected to rise both this year and next.”
