–2011 GDP Projection Revised Down to +2.7% From Prev Estimate of +3.2%
–Expect Real GDP to Grow by 3.2% Q2 vs Prev Estimate of +3.5%
–Non-farm Payrolls Expected to Avg 191,100/Month Q2, 130,400 In 2011
By Brai Odion-Esene
WASHINGTON (MNI) – The outlook for U.S. economic growth over the
next four years has been revised downwards, with the 44 forecasters
surveyed by the Philadelphia Federal Reserve Bank now expecting economic
activity to expand at a slower pace, according to the survey published
Friday.
They do see a brighter picture for the jobs market, however,
lowering their projection of the unemployment rate over the next four
years compared with the previous survey.
The forecasters now believe “growth in the U.S. economy looks a
little slower now than it did three months ago,” the Philadelphia Fed
said in its summary of the survey results. “On an annual-average over
annual-average basis, the forecasters also predict slower real GDP
growth over the next four years.”
The panelists expect real GDP to grow at an annual rate of 3.2%
this quarter, down from the previous estimate of 3.5%. The forecasters
see real GDP growing 2.7% in 2011, down from their prediction of 3.2% in
the last survey.
The forecasters predict real GDP will grow 3.0% in 2012, 2.8% in
2013, and 3.3% in 2014, each somewhat lower than their respective
predictions in the last survey.
“The forecasters continue to see a small chance of a contraction in
real GDP in any of the next four quarters. For the current quarter, they
predict a 7.0% chance of negative growth, little changed from the survey
of three months ago.” the Philly Fed said.
With regards to the outlook for jobs, The Philly Fed said
respondents to the survey “see a brighter picture for the unemployment
rate over the next four years.”
The survey projects the unemployment rate to be an annual average
of 8.7% in 2011, 8.1% in 2012, 7.5% in 2013, and 7.0% in 2014. These
estimates are all lower than the projections in the last survey.
On the jobs front, the pace at which jobs are added is expected to
be slower in 2011 and 2012 than they predicted in the last survey. The
forecasters’ projections for the annual-average level of nonfarm payroll
employment suggest job gains at a monthly rate of 130,400 in 2011 and
194,800 in 2012, compared to an expectation of 134,900 and 226,100,
respectively, in the previous survey.
The forecasters see nonfarm payroll employment growing at a rate of
191,100 jobs per month this quarter and 194,500 jobs per month next
quarter.
On the inflation front, the survey predicts higher inflation, both
in the short run and over the long run, for the survey’s four measures
of inflation.
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%.
Current-quarter core PCE is projected to be 1.5%, compared to the
last survey’s estimate of 1.3%.
Measured on a fourth-quarter over fourth-quarter basis, headline
CPI inflation 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.
Over the next 10 years, 2011 to 2020, the forecasters expect
headline CPI inflation to average 2.4% at an annual rate. This estimate
is up slightly from 2.3% in the last survey.
** Market News International Washington Bureau: 202-371-2121 **
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