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Forecasters Expect Lower Growth and Higher Unemployment over the Next Two Years
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The economy looks weaker now than it did in February, according to 51 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters project lower real GDP growth and higher unemployment rates in 2009 and 2010 than they did three months ago. In the current year, the forecasters see the economy contracting at a rate of 2.8 percent (annual-average over annual-average) — a downward revision of 0.8 percentage point from their forecast of 2.0 percent made three months ago. The panelists expect the economy in 2010 to expand 2.0 percent, down from their projection of 2.2 percent in the last survey. In answer to this survey's special questions (described in the section below), the forecasters report that real GDP will expand 2.7 percent in 2011 and 3.0 percent in 2012. On a quarterly basis, the forecasters expect a contraction at an annual rate of 1.5 percent in the current quarter, followed by growth over the next four quarters, from 0.4 percent in the third quarter of 2009 to 2.9 percent in the second quarter of 2010.
An upward revision to the forecast for the unemployment rate accompanies the outlook for economic growth. The forecasters predict that unemployment will increase from 9.1 percent this quarter to 9.8 percent in the first quarter of 2010. Previously, unemployment was forecast to rise from 8.3 percent to 9.0 percent over the same period. Unemployment is expected to average 9.1 percent this year and rise to 9.6 percent in 2010. In answer to special questions, the forecasters predict that annual-average unemployment will fall to 8.7 percent in 2011 and 7.7 percent in 2012. On the jobs front, the forecasters project job losses in the current quarter at a rate of 521,500 per month. They also see a reduction in jobs of 282,500 per month in the third quarter and 104,700 in the fourth quarter of 2009. They previously projected monthly job losses of 311,200, 202,100, and 43,000 in the second quarter, the third quarter, and the fourth quarter of 2009, respectively. On an annual-average basis, jobs are expected to decline 422,600 per month in 2009 and 13,900 in 2010.
Posted: May 15, 2009 Friday 10:00 AM