NEW YORK – Real gross domestic product should grow at a 3.3% annualized rate over the next half year, according to the Federal Reserve Bank of Philadelphia’s survey of professional forecasters.
The 3.3% estimate is up from the 2.7% rate expected in the prior survey, conducted three months ago.
“On an annual-average over annual-average basis, the forecasters expect more robust real GDP growth in 2010 and 2011, but slower real GDP growth in 2012 and 2013,” the survey reported. The forecasters now see real GDP up 3.3% this year, 3.1% next year, 3.2% in 2012 and 2.9% in 2013. pIn the prior survey, the forecasters predicted 3.0% growth this year.
The GDP growth is spurred by a stronger labor market, with unemployment now seen at 9.6% this year, 8.9% next year, 8.0% in 2012 and 7.1% in 2013. Non-farm payroll employment is seen picking up 207,300 jobs per month on average in this quarter and 120,500 a month next quarter, both are big increases from the previous survey.
Projections for inflation decreased slightly, with forecasters expecting headline consumer price index inflation to rise 1.4% this quarter, 1.8% in the third quarter, 1.8% in the fourth quarter, 1.9% in the first quarter of 2011, and 2.0% in the second quarter, while at the core, the forecasters see inflation of 1.0%, 1.4%, 1.5%, 1.5% and 1.6% by quarter through the middle of 2011.
Inflation based on consumption, by quarter is seen at 1.1% this quarter, 1.7%, 1.6%, 1.8% and 1.7% in the second quarter of 2011, while the core PCE is expected to grow 1.1% in this quarter, 1.2% in the third quarter, 1.3% in the final quarter of the year, 1.4% in the first quarter of 2011 and 1.5% in the second quarter of 2011.
“The risk of a contraction continues to diminish,” according to the forecasters, who revised downward the chance of a contraction in real GDP in any of the next four quarters. For this quarter the risk fell to 7.4% from 11.6%, for next quarter the risk is 9.8%, which is down from 13.2%, in the fourth quarter the chance of a downturn fell to 12.3% from 14.0% and in the first quarter of 2011, the probability slipped to 14.1% from 14.8%.
