Research >> Economics
Forecasters Predict Lower Growth and Higher Unemployment 2012-13
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The outlook for growth and unemployment in the U.S. economy looks a little weaker now than it did three months ago, according to 45 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters predict lower real GDP growth and higher unemployment rates in 2012 and 2013 than they did in August. Our panelists expect real GDP to grow at an annual rate of 2.6 percent this quarter, unchanged from the previous estimate. On an annual-average over annual-average basis, the forecasters see real GDP growing 1.8 percent in 2011 (1.7 percent previously). The forecasters predict real GDP will grow 2.4 percent in 2012 (2.6 percent previously) and 2.7 percent in 2013 (2.9 percent previously). The downward revision in 2012 and 2013 is accompanied by an upward revision for growth in 2014.
Upward revisions to unemployment and downward revisions to job growth accompany the current outlook for growth. Unemployment is projected to be an annual average of 9.0 percent in 2011, before falling to 8.8 percent in 2012, 8.4 percent in 2013, and 7.8 percent in 2014. The estimates for 2012, 2013, and 2014 are higher than the projections in the last survey. On the employment front, the forecasters have revised downward the growth in jobs over the next two years. The forecasters see nonfarm payroll employment growing at a rate of 115,300 jobs per month this quarter and 121,000 jobs per month next quarter. The forecasters’ projections for the annual average level of nonfarm payroll employment suggest job gains at a monthly rate of 106,500 in 2011, and 123,200 in 2012, as the table below shows. (These annual-average estimates are computed as the year-to-year change in the annual-average level of nonfarm payroll employment, converted to a monthly rate.)
Little Change in the Outlook for Inflation
The forecasters have left their short-term projections for inflation in 2012 and 2013 nearly unchanged from their previous projections. Headline CPI inflation in 2012 will average 1.9 percent, down from 2.0 percent previously. Headline CPI inflation will rise to 2.2 percent in 2013, up 0.1 percentage point from the previous estimate. Core CPI inflation in 2012 will average 1.8 percent, unchanged from the previous survey, and rise to 2.0 percent in 2013. The projections for headline and core PCE inflation follow a similar pattern.
Over the next 10 years, 2011 to 2020, the forecasters expect headline CPI inflation to average 2.5 percent at an annual rate. This estimate is up slightly from 2.4 percent in the last survey. Over the same period, headline PCE inflation will average 2.16 percent at an annual rate, down slightly from last survey’s estimate of 2.25 percent.
Posted: November 14, 2011 Monday 10:00 AM