Forecasters Predict Stronger Labor Market

The outlook for growth in the U.S. economy over the next three years looks mostly unchanged from that of three months ago, according to 46 forecasters surveyed by the Federal Reserve Bank of Philadelphia.

The panel expects real GDP to grow at an annual rate of 2.1% this quarter and 2.3% next quarter and to rise to 2.7% in the first quarter of 2014. On an annual-average over annual-average basis, the forecasters see real GDP growing 1.9% in 2013, down slightly from the previous estimate of 2.0%. The forecasters predict real GDP will grow 2.8% in 2014, 2.9% in 2015, and 3.0% in 2016.

Healthier conditions in the labor market accompany the nearly stable outlook for real output. The forecasters predict that the unemployment rate will be an annual average of 7.7% in 2013, before falling to 7.2% in 2014, 6.7% in 2015, and 6.3% in 2016. These projections are below those of the last survey.

The forecasters are also more optimistic about the employment front. They have revised upward their estimates of the growth in jobs in the next four quarters. The forecasters see nonfarm payroll employment growing at a rate of 165,300 jobs per month this quarter and 154,200 jobs per month next quarter. The forecasters' projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 164,100 in 2013 and 176,800 in 2014, as the table below shows. (These annual-average estimates are computed as the year-to-year change in the annual-average level of nonfarm payroll employment, converted to a monthly rate.)

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