NEW YORK – The economy is not looking as strong as it did three months ago, according to the Federal Reserve Bank of Philadelphia’s survey of professional forecasters, which was released Friday.
The projection for real GDP growth in the second quarter was dropped to 3.2% from 3.5%, but for the next two quarters the estimates were raised to 3.4% and 3.5% from 3.1% and 3.4%, respectively. For the first quarter of 2012, the estimate was cut to 2.9% from 3.1%. Forecasters see second quarter 2012 GDP growth at 2.5%.
But the annual numbers were all lowered. GDP growth for 2011 was cut to 2.7% from 3.2%, 2012 was sliced to 3.0% from 3.1%, 2013 was trimmed to 2.8% from 3.0% and 2014 is now seen at 3.3%, down from 3.4% in the prior survey.
The forecasters also see unemployment falling quicker, lowering their unemployment rates by three percentage points per quarter to 8.9%, 8.7%, 8.5%, and 8.4% for the next four quarters, while the annual rate for this year was slashed to 8.7% from 9.1%, with next year forecast at 8.1%, off from 8.5%, 2013 at 7.5%, compared to 7.8% in the prior survey, and at 7.0% in 2014, down from 7.3%.
“The forecasters predict higher inflation, both in the short run and over the long run, for the survey’s four measures of inflation,” according to the survey. “The forecasters expect current-quarter headline CPI inflation to average 3.5%, up from the last survey’s estimate of 1.3%. The forecasters predict a higher current-quarter headline PCE inflation of 2.7%, up from the last survey’s estimate of 1.3%.”
Headline CPI inflation on an annual basis (fourth quarter to fourth quarter) “is expected to average 3.1% in 2011, 2.2% in 2012, and 2.3% in 2013, higher than the forecasts of 1.7%, 2.0%, and 2.1%, respectively, in the last survey.”
Forecaster also raised their projections for headline CPI inflation over the next 10 years, 2011 to 2020, to an average 2.4% annual rate from 2.3% in the last survey.
