The economy is not looking as strong going forward three years as it did last quarter and the increase in jobs will not be as large as they have recently, according to the Federal Reserve Bank of Philadelphia's survey of professional forecasters for the second quarter.
Gross domestic product is expected to grow at a 2.5% annual rate this quarter and 3.1% next quarter, while over the year, GDP is seen growing 2.4% this year, down 0.8-point from the February estimate. The forecast calls for 2.8% GDP growth in each of the next two years and 2.5% in 2018.
Unemployment is seen averaging 5.4% this year, 5.0% next year, and 4.8% the two years following.
Job increases for this year and next were revised down. "The forecasters see nonfarm payroll employment growing at a rate of 195,300 jobs per month this quarter, 223,300 jobs per month next quarter, and 223,000 jobs per month in the fourth quarter of 2015. The forecasters' projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 243,900 in 2015 and 180,100 in 2016," the report states.
Inflation, based in the consumer price index, was increased to a projected 1.9% this quarter, up from 1.6% in the prior survey, while when measured by the personal consumption expenditures index, the forecasters see 1.6% inflation this quarter, compared to predictions of 1.4% in the last survey.
Year-over-year, the forecasters lowered CPI inflation expectations to 0.7% for this year, after the February survey predicted 1.1% inflation, while CPE was down to 0.8% from 1.1%.
"Over the next 10 years, 2015 to 2024, the forecasters expect headline CPI inflation to average 2.14% at an annual rate," according to the survey. "The corresponding estimate for 10-year annual-average PCE inflation is 1.98%."
