NEW YORK – Real gross domestic product projections were increased, with forecasters seeing rates of up to 3.1% growth in real GDP in the last half of 2009, although predictions for the jobless rate now hover above the 10% mark, according to the latest Livingston Survey, released today by the Federal Reserve Bank of Philadelphia.
Real GDP, after rising a projected 3.1% in the last half of this year, will go up 2.6% at an annual rate in the first half of 2010 and 3.0% in the last half of next year, according to the survey. In the previous survey, released in June, the projections for GDP growth were 1.1% for the last half of 2009, and 2.6% for the first half of 2010.
The 39 participants in the survey see the unemployment rate at 10.3% in both December 2009 and June 2010, compared to predicted rates of 9.9% and 9.8%, respectively, in the prior survey. The jobless rate is then expected to dip to 9.9% by December 2010.
Inflation is also predicted to be higher than previously expected. Inflation, as measured by the consumer price index, is seen declining at a 0.3% annual rate for 2009, compared to the previous estimate of a 0.7% drop. Inflation is then expected to average 2.2% in 2010, up from the 1.7% estimate in the previous survey. In 2011 inflation is expected to average 1.8%.
When using the producer price index, inflation is expected to drop 2.7% in 2009, compared to earlier predictions of a 3.6% decrease, rising 2.4% next year, compared to a 1.3% gain in the prior survey. From 2010 to 2011, PPI-based inflation is seen at 1.8%.
“Forecasts for interest rates on three-month Treasury bills and 10-year Treasury bonds are lower than those made in our last survey,” the Fed said. “At the end of June 2010, the interest rate on three-month Treasury bills is predicted to be 0.25%, revised down from 0.54% in the survey of six months ago. Livingston forecasters predict that the rate will then rise to 1.0% at the end of 2010, and then to 2.71% at the end of 2011. The interest rate on 10-year Treasury bonds is predicted to reach 3.76% at the end of June 2010, down from the previous estimate of 4.00%. According to the forecasters, it will then rise to 4.10% at the end of 2010, and to 4.64% at the end of 2011.”
