NEW YORK – Economic growth appears to be weakening compared to estimates from three months ago, as those surveyed for the Federal Reserve Bank of Philadelphia’s third quarter survey of Professional Forecasters cut estimates of GDP growth this quarter to 2.3% from 3.3%.
For 2010, the forecasters see real GDP rising 2.9%, also reduced from 3.3% predicted in the second quarter survey. Next year, GDP should expand 2.7% followed by 3.6% growth in 2012 and 2.6% expansion in 2013, according to the survey.
Unemployment projections were raised, with the forecasters now expecting jobless levels of 9.6% this year, 9.2% in 2011, 8.2% in 2012 and 7.3% in 2013. The economy should add an average 8,000 jobs a month this quarter and soar to 114,100 jobs a month next quarter.
Inflation expectations were revised lower, with the forecasters projecting CPI inflation to average 2.3% though 2019, while PCE inflation is seen at 2.11% over the decade. Both numbers are down from the prior survey.
“The panelists have marked down their projections for growth and they see higher unemployment,” said Tom Stark assistant director and manager, real-time data research center. “Also, we see a slightly higher probability of a downturn in the next two quarters, as well as reduced expectations for inflation. However, it is important to keep things in perspective. The forecasters continue to see the economy growing steadily. They have raised their odds of a downturn but they do not think it is likely. The forecasters continue to project a downward path for unemployment. And, yes, they have reduced their projections for inflation but they do not believe that deflation is likely. ”
