Real gross domestic product is seen falling 1.8% this year, before growing at an above-trend 3.2% next year, according to predictions at the Chicago Federal Reserve Bank’s annual Automotive Outlook Symposium.
Inflation, as measured by the consumer price index, is seen dropping 0.5% this year and rising 1.6% in 2010, according to the consensus at the symposium. Unemployment is expected to climb to 9.9% by year’s end and then edge down to 9.5% by the end of 2010.
“Most of the major components of real GDP — particularly business fixed investment — are expected to contribute to the slow forecast for economic growth in 2009,” the Fed said in a statement. “Economic growth is forecasted to improve in 2010, in large part because of an expansion in spending in residential investment. Industrial production is forecast to decline at a fast pace in 2009 and then increase at a much faster rate than the overall economy in 2010.”
One- and ten-year Treasury interest rates are seen falling this year and rising next year.