NEW YORK – Almost three out of four professional forecasters surveyed expect inflation to be near the 2% the Federal Open Market Committee targets, according to the Survey of Professional Forecasters, released by the Federal Reserve Bank of Philadelphia Friday.
Only 8 of the 31 respondents said the Fed would not achieve its goal, with none expecting inflation to go higher than 3.05% by 2021.
The outlook for economic growth was stable from the prior quarter, real GDP expected to grow at an annual rate of 2.4% this quarter, up slightly from the previous estimate of 2.3%. But, in the next three quarters, GDP is seen growing an average 2.6%, down from 2.8% in the last survey.
Year-over-year, the forecasters predict real GDP growth of 2.3% this year and 2.7% next, unchanged from the previous survey. The forecasters see real GDP gaining 3.1% in 2014 and 3.4% in 2015.
The forecasters see unemployment at an annual average of 8.1% in 2012, 7.7% in 2013, 7.2% in 2014, and 6.6% in 2015. The estimates for 2012, 2013, and 2014 are 0.2 percentage point lower than the projections in the last survey.
Inflation, as measured by CPI, is seen averaging 2.1% this quarter, up slightly from the last survey’s estimate. When using PCE to measure inflation, the forecaster predict 2.0% inflation this quarter, 0.3 percentage point higher than their previous estimate.
Annual CPI inflation is expected to average 2.3% this year, up from the estimate of 2.0% in the last survey; 2.1% next year, down from 2.2%; and 2.5%t in 2014, up from 2.3%.
Annual PCE inflation should average 2.1% this year, up from the 1.9% estimate three months ago; 2.0% next year, as previously estimated; and 2.2% in 2014, up from 2.1%.
“Over the next 10 years, 2012 to 2021, the forecasters expect headline CPI inflation to average 2.48% at an annual rate, higher than the estimate of 2.30% from the survey of three months ago,” the survey reported.
“The forecasters have revised downward the chance of a contraction in real GDP in any of the next quarters in 2012,” according to the survey. “For the current quarter, they predict a 9.8% chance of negative growth, down from 13.4% in the survey of three months ago.”
For the first quarter 2013, the forecasters say there’s a 17.3% chance of negative growth, compared to the 15.8% chance in the first quarter survey.