WASHINGTON — Economists believe the outlook for U.S. economic growth over the next two quarters is weaker compared to past expectations, but it should then accelerate by close to 3% after that, the Philadelphia Federal Reserve Bank said Monday.
The outlook for jobs and inflation is only slightly improved in its updated survey of professional forecasters while the rearranged GDP data points for 2014 are little changed overall, with mostly unchanged expectations around the probability of a negative quarter next year.
The overall outlook sees steady improvement in most metrics, with a plodding course of moderate growth and jobs gains accompanied by relatively stable inflation around 2%. The survey did not reference any influence on the numbers from October's government shutdown and debt ceiling battle on Capitol Hill.
"The outlook for growth in the U.S. economy is little changed from the survey of three months ago," the Philadelphia Fed's compilation of survey results said.
Those surveyed expect real GDP to grow at an annual rate of 1.8% this quarter vs. the previous expectation of +2.3%, 2.5% in the first quarter of 2014 - down from the +2.7% previously forecast, and then growth of 2.9% in the second quarter.
On an annual-average over annual-average basis, the forecasters see real GDP growing 1.7% in 2013, up from the previous estimate of 1.5%. The forecasters predict real GDP will grow 2.6% in 2014 and 2.8% in 2015, before dipping to 2.7% in 2016.
The series for payrolls and unemployment rates showed somewhat better results throughout. Unemployment is projected to be an annual average of 7.5% in 2013, before falling to 7.0% in 2014, 6.4% in 2015 - just below the Federal Open Market Committee's 6.5% employment threshold, and 6.0% in 2016.
On a quarterly basis, the forecast for the unemployment rate in Q4 was revised to 7.2% from 7.3%, it then falls to 7.1% by Q1 2014 (compared to 7.2% previously expected), and then 7.0% by the second quarter.
They also forecast better jobs growth compared to the survey three months ago for the current quarter, seeing a monthly average of payroll additions of 187,300 instead of the 178,600 previously. The revisions are less pronounced but still sizable in other quarters, with 187,000 in the first quarter of 2014 versus the previous estimate of 171,200, and Q2 2014 revised up to 193,500 from 185,400.
The third quarter next year will see payroll gains climb above 200,000 a month, with the average for the whole year from the 42 responses at 189,900.
On inflation, "the forecasters expect current-quarter headline CPI inflation to average 1.6%, slightly lower than the last survey's estimate of 1.7%. They predict current-quarter headline PCE inflation of 1.5%, down from 1.7% in the previous survey," the survey said.
Headline PCE inflation is forecast to average 1.1% this year and 1.9% in 2014, little changed from the previous estimates of 1.2% and 1.8%, respectively, in the last survey. The current projection of 1.9% in 2015 is essentially unchanged from the previous estimate.
Core PCE inflation will average 1.2% this year (vs. 1.3% in the last survey) and 1.7% in 2014 (down from 1.8%). Those surveyed still expect core PCE inflation to average 1.9% in 2015.
Ten-year annual-average PCE inflation is projected to be 1.8%, vs. the 2.0% forecasters predicted in the last survey.
The forecasters maintained their confidence in their outlooks for positive growth. For the fourth quarter, they predict a 11.3% chance of negative growth, up from 11.2% in the survey of three months ago. Those odds slip further to 11.1% by Q1 2014.
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