Lower gross domestic product growth and higher unemployment are predicted by participants in the Federal Reserve Bank of Philadelphia's June Livingston Survey, released Wednesday.
The forecast for GDP were cut to 1.4% for the first half of 2016 from 2.5% in the December survey, while the second half is seen growing 2.4%, off from 2.6% in the prior survey. The first half of 2017 should see 2.1% growth, according to the forecast.
Projections for the unemployment rate were raised to 4.9% for June from 4.8%, while December's prediction was also raised a tick to 4.7% from 4.6%. In June 2017, unemployment will be 4.7%, according to participants.
The participants also slashed inflation expectations, with CPI inflation seen at 1.3% in 2016 and 2.1% next year, compared to the prior predictions of 1.8% and 2.2%. PPI inflation projections were cut to negative 1.4% this year and 2.3% in 2017 from 0.7% and 2.4%.
"The panelists softened their forecasts for the interest rates on three-month Treasury bills and 10-year Treasury bonds from of six months ago," according to the release. "At the end of June 2016, the interest rate on three-month Treasury bills is predicted to be 0.35%, a downward revision from 0.68% in the survey six months ago. The forecasters predict that the three-month rate will be 0.75% at the end of December 2016 and continue to rise to 1.12% at the end of June 2017. The three-month Treasury bill interest rate is expected to reach 1.55% at the end of December 2017. Similarly, the interest rate on 10-year Treasury bonds is predicted to reach 1.90% at the end of June 2016, a downward revision from 2.55% in the survey six months ago. The forecasters also predict the 10-year
rate will rise to 2.25% at the end of December 2016 and continue to rise to 2.45% at the end of June 2017. The 10-year Treasury bond interest rate is expected to reach 2.60% at the end of December 2017."
