–2012 GDP Projection Revised Down To 2.2% Vs 2.3%; 2013 2.1% Vs 2.7%
–Expect Q3 Real GDP to Grow 1.6% Vs 2.5%; Q4 2.2% Vs 2.6%
–Panelists Trim Employment Forecasts
–Forecasters See Higher Risk Of Contraction For Next 4 Quarters
By Yali N’Diaye
WASHINGTON (MNI) – A Philadelphia Fed survey published Friday
showed respondents lowered growth and employment expectations for the
next few years, while seeing higher risk of a negative GDP in any of the
next four quarters.
In line with a bleaker economic outlook, projections for inflation
were revised down, according to the Philadelphia Federal Reserve’s third
quarter survey of 48 professional forecasters.
Forecasters now see the real GDP grow at a pace of 1.6% in the
third quarter of this year, revised down from 2.5% in the previous
survey. The growth pace for 4Q12 was revised down to 2.2% from 2.6%.
For 2013, the growth pace is now seen at 1.8% in the first quarter
vs. 2.6%, and at 2.3% in the second quarter, revised down from 2.7%. The
initial forecast for the third quarter is 2.5%.
On average, annual GDP growth is seen at 2.2% in 2013 (vs. 2.3%),
2.1% in 2013 (vs. 2.7%), 2.7% in 2014 (vs. 3.1%) and 3.1% in 2015 (vs.
3.4%).
In addition to lowering their growth expectations, “The forecasters
have revised upward the chance of a contraction in real GDP in any of
the next four quarters,” the report said, with a peak seen in the risk
of contraction seen in the first quarter of next year.
The risk of a negative quarter in 3Q 2012 was revised up to 13.8%
from 12.2%. It is now seen at 17.0% for 4Q (vs. 14.5%), 21.2% for 1Q
2013 (vs. 17.3%) and 21.0% for 2Q 2013 (vs. 17.8%). The risk is seen
diminishing further in 3Q 2013 to 19.1%.
Against this backdrop, forecasters also downgraded the outlook for
employment growth, seeing the pace of job creation at 125,000 per month
in 3Q 2012 (vs 170,000/month), 135,300 per month in 4Q 2012 (vs.
172,600), 151,700 per month in 1Q 2013 (vs. 170,300) and 139,700 for 2Q
2013 (vs. 185,800). Forecasters expect a pickup to 149,000 per month in
3Q 2013.
The average is seen at 154,600 this year and 143,200 next year,
revised down from 171,900 and 175,700, respectively.
The unemployment rate is see slowly improving to 7.8% in 3Q 2013
from 8.2% in 3Q 2012, with upward revisions ranging from 0.1 to 0.2
point.
On average, the unemployment rate is seen improving to 7.0% in 2015
from 8.2% this year, with upward revisions to every year, including in
2015, when it is no longer seen below 7%.
The bleaker growth and employment prospects also translated into
inflation forecasts, although the results for long-term expectations
were “mixed.”
The downward revision to headline average CPI for 3Q 2012 was
particularly sharp: +1.5% compared with +2.3% in the previous survey.
On the other hand, core CPI was revised up to +2.2% from +2.0% for
3Q 2012.
The pattern was similar for headline PCE inflation and core PCE
inflation, seen at +1.5% (vs. 1.9%) and +1.9% (vs. +1.7%), respectively
in 3Q 2012.
Headline CPI is seen rising to 2.2% in 3Q 2013, with 0.1 point
downward revisions for each quarter through 2Q 2013.
Core CPI, on the other hand, is seen slowly declining to 2.0% in 4Q
2012 where it is expected to stay through 2Q 2013.
Over the next 10 years, 2012 through 2021, headline CPI inflation
is seen averaging 2.35%, lower than the 2.48% expected three months ago.
However, the corresponding estimate for headline PCE inflation is
unchanged at 2.20%.
** MNI Washington Bureau: 202-371-2121 **
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