NEW YORK – Economic growth should be stronger than expected for the next three quarters but slow down toward year end, with 2.7% average annual growth for the next five quarters, according to 42 professional forecasters surveyed by the Federal Reserve Bank of Philadelphia.
The forecasters see 3.0% growth this year, better than the 2.4% growth they projected in the prior survey, with 2.9% GDP growth in 2011, 3.4% in 2012 and 3.1% in 2013.
The survey also offers good news in the jobs market, with projections of 9.8% unemployment this year, 9.2% next year, 8.3% in 2012 and 7.3% in 2013.
“Upward revisions for the growth in jobs over the next two quarters of 2010 are to be followed by downward revisions over the second half of the year,” the survey reported. Nonfarm payroll employment should grow by 600 jobs a month this quarter and 117,600 jobs per month next quarter, according to the forecasters, with both estimates upwardly revised from the previous survey. In the last half of this year, jobs will grow an average 96,000 per month, while they expect job losses at a monthly rate of 59,000 in 2010, before turning around next year with an average monthly job gain of 142,000 a month.
Inflation projections are near what they were in the prior survey. “Over the next 10 years, 2010 to 2019, the forecasters expect headline CPI inflation to average 2.39% at an annual rate. This estimate is up from the last survey, when the forecasters thought headline CPI inflation over the 10-year period from 2009 to 2018 would average 2.26%. The 10-year outlook for PCE inflation is unchanged.
The forecasters see less chance of a contraction in real GDP in any of the next three quarters, cutting the risk of a downturn this quarter to 9.9% from 15.9 percent previously. Forecasters also see less chance of a GDP contraction in the second quarter (11.6% vs. 14.0%) and the third quarter (13.2% vs. 13.8%).
