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posted on 13 November 2017

Fourth Quarter 2017 Survey of Professional Forecasters See Stronger Outlook for Growth over the Next Two Quarters

from the Philadelphia Fed

The outlook for growth in the U.S. economy over the next two quarters looks slightly stronger overall than that of three months ago, according to 41 forecasters surveyed by the Federal Reserve Bank of Philadelphia.

The panel expects real GDP to grow at an annual rate of 2.6 percent this quarter and 2.4 percent next quarter, marking upward revisions from the previous survey. On an annual-average over annual-average basis, the forecasters see real GDP growing 2.2 percent in 2017, compared with 2.1 percent from the previous survey. The forecasters predict real GDP will grow 2.5 percent in 2018, 2.1 percent in 2019, and 1.9 percent in 2020.

The projections for annual unemployment rates were either unchanged or revised slightly downward in comparison with the third quarter 2017 survey. The forecasters predict the unemployment rate will be an annual average of 4.4 percent in 2017, before falling to 4.1 percent in 2018, and then decreasing to 4.0 percent in 2019 and 4.1 percent in 2020.

On the employment front, the forecasters have revised downward their estimates for job gains in 2017 and in 2018. The forecasters' projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 178,000 in 2017, down from the previous estimate of 180,400, and 163,400 in 2018, down from the previous estimate of 165,800. (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.)

Median Forecasts for Selected Variables in the Current and Previous Surveys

Real GDP (%)

Unemployment Rate (%)

Payrolls (000s/month)







Quarterly data:
2017:Q4 2.3 2.6 4.2 4.2 161.0 183.0
2018:Q1 2.2 2.4 4.2 4.1 155.6 164.9
2018:Q2 2.4 2.4 4.1 4.1 162.5 167.0
2018:Q3 2.4 2.1 4.1 4.1 165.4 157.1
2018:Q4 N.A. 2.3 N.A. 4.0 N.A. 155.6
Annual data (projections are based on annual-average levels):
2017 2.1 2.2 4.4 4.4 180.4 178.0
2018 2.4 2.5 4.2 4.1 165.8 163.4
2019 2.2 2.1 4.3 4.0 N.A. N.A.
2020 2.0 1.9 4.3 4.1 N.A. N.A.

The charts below provide some insight into the degree of uncertainty the forecasters have about their projections for the rate of growth in the annual-average level of real GDP. Each chart presents the forecasters' previous and current estimates of the probability that growth will fall into each of 11 ranges. For 2017, the panelists are more certain now than they were in the previous survey that real GDP growth would fall between 2.0 percent and 2.9 percent. For 2018 and 2019, the probabilities are also slightly higher now than they were in the survey of three months ago for real GDP growth between 2.0 percent and 2.9 percent. The probabilities for growth in 2020 are about the same now as they were in the previous survey.

The forecasters' density projections for unemployment, shown below, shed light on uncertainty about the labor market over the next four years. Each chart presents the forecasters' current estimates of the probability that unemployment will fall into each of 10 ranges. The forecasters are more certain now than they were three months ago that unemployment over 2017 will average between 4.0 percent and 4.9 percent. The forecasters are less certain now than they were three months ago that unemployment will average between 4.0 percent and 4.9 percent over 2018, 2019, and 2020. In addition, forecasters notably raised their probability estimates for an unemployment rate below 4.0 percent over 2018, 2019, and 2020.

Short-Term CPI and PCE Inflation Projections Are Holding Steady

Measured on a fourth-quarter over fourth-quarter basis, the CPI and PCE inflation forecasts are about the same now as they were three months ago, particularly for core inflation measures. Core CPI inflation is expected to average 1.7 percent in 2017, 2.1 percent in 2018, and 2.2 percent in 2019. The projections for core PCE inflation are 1.4 percent for the current year, 1.8 percent for 2018, and 2.0 percent for 2019.

Over the next 10 years, 2017 to 2026, the forecasters expect headline CPI inflation to average 2.20 percent at an annual rate, down slightly from their previous estimate of 2.25 percent. The corresponding estimate for 10-year annual-average PCE inflation is 2.00 percent, unchanged from the previous estimate three months ago.

Median Short-Run and Long-Run Projections for Inflation (Annualized Percentage Points)

Headline CPI

Core CPI

Headline PCE

Core PCE









2017:Q4 2.3 2.3 2.1 1.9 2.0 1.9 1.8 1.6
2018:Q1 2.2 2.1 2.2 2.0 1.9 1.7 1.8 1.7
2018:Q2 2.1 2.0 2.1 2.1 1.9 1.8 1.8 1.8
2018:Q3 2.2 2.2 2.2 2.1 1.9 1.9 1.9 1.8
2018:Q4 N.A. 2.1 N.A. 2.2 N.A. 1.9 N.A. 1.9
Q4/Q4 Annual Averages
2017 1.7 1.8 1.7 1.7 1.5 1.5 1.5 1.4
2018 2.2 2.1 2.1 2.1 1.9 1.8 1.8 1.8
2019 2.3 2.3 2.2 2.2 2.0 2.0 2.0 2.0
Long-Term Annual Averages
2017-2021 2.20 2.20 N.A. N.A. 1.94 1.90 N.A. N.A.
2017-2026 2.25 2.20 N.A. N.A. 2.00 2.00 N.A. N.A.

The charts below show the median projections (red line) and the associated interquartile ranges (gray areas around the red line) for the projections for 10-year annual-average CPI and PCE inflation. The charts highlight a marginally lower level of the long-term projection for CPI inflation and an unchanged long-term projection for PCE inflation.

The charts below show the probabilities that the forecasters are assigning to the possibility that fourth-quarter over fourth-quarter core PCE inflation in 2017 and 2018 will fall into each of 10 ranges. For 2017, the forecasters assign a higher chance than they previously predicted that core PCE inflation will be between 1.0 percent to 1.4 percent. For 2018, the forecasters assign a higher chance that core PCE inflation will be between 1.5 percent and 1.9 percent than they previously predicted.

Reduced Risk of Decline in Real GDP in 2017 and 2018

The forecasters see only a small chance of a contraction in real GDP in any of the next five quarters. For the current quarter, they predict a 6.3 percent chance of negative growth, down from 10.5 percent in the survey of three months ago. Notably, the forecasters see a lower probability of a negative quarter in 2017 and 2018 than they estimated three months ago.

Risk of a Negative Quarter (%)
Survey Means
Quarterly data: Previous New















Technical Notes

Moody's Aaa and Baa Historical Rates

The historical values of Moody's Aaa and Baa rates are proprietary and, therefore, not available in the data files on the Bank's website or on the tables that accompany the survey's complete write-up in the PDF.

New File Format

On May 12, 2017, the survey's data files on the Bank's website were changed to a .xlsx extension instead of .xls.

The Federal Reserve Bank of Philadelphia thanks the following forecasters for their participation in recent surveys:

Lewis Alexander, Nomura Securities; Scott Anderson, Bank of the West (BNP Paribas Group); Robert J. Barbera, Johns Hopkins University Center for Financial Economics; Peter Bernstein, RCF Economic and Financial Consulting, Inc.; Christine Chmura, Ph.D., and Xiaobing Shuai, Ph.D., Chmura Economics & Analytics; Gary Ciminero, CFA, GLC Financial Economics; Nathaniel Curtis, Navigant Consulting; Gregory Daco, Oxford Economics USA, Inc.; Rajeev Dhawan, Georgia State University; Gabriel Ehrlich, Daniil Manaenkov, Ben Meiselman, Owen Nie, and Aditi Thapar, RSQE, University of Michigan; Michael R. Englund, Action Economics, LLC; J.D. Foster, U.S. Chamber of Commerce; Michael Gapen, Barclays Capital; Sacha Gelfer, Bentley University; James Glassman, JPMorgan Chase & Co.; Jan Hatzius, Goldman Sachs; Keith Hembre, Nuveen Asset Management; Peter Hooper, Deutsche Bank Securities, Inc.; Sam Kahan, Kahan Consulting Ltd. (ACT Research LLC); N. Karp, BBVA Research USA; Walter Kemmsies, Jones Lang LaSalle; Jack Kleinhenz, Kleinhenz & Associates, Inc.; Thomas Lam, Independent Economist; L. Douglas Lee, Economics from Washington; John Lonski, Moody's Capital Markets Group; Macroeconomic Advisers, LLC; R. Anthony Metz, Pareto Optimal Economics; Michael Moran, Daiwa Capital Markets America; Joel L. Naroff, Naroff Economic Advisors; Michael Neal, National Association of Home Builders; Mark Nielson, Ph.D., MacroEcon Global Advisors; Luca Noto, Anima Sgr; Brendon Ogmundson, BC Real Estate Association; Arun Raha and Maira Trimble, Eaton Corporation; Philip Rothman, East Carolina University; Chris Rupkey, MUFG Union Bank; John Silvia, Wells Fargo; Sean M. Snaith, Ph.D., University of Central Florida; Constantine G. Soras, Ph.D., CGS Economic Consulting; Stephen Stanley, Amherst Pierpont Securities; Charles Steindel, Ramapo College of New Jersey; Susan M. Sterne, Economic Analysis Associates, Inc.; James Sweeney, Credit Suisse; Thomas Kevin Swift, American Chemistry Council; Richard Yamarone, Bloomberg, LP; Mark Zandi, Moody's Analytics; Ellen Zentner, Morgan Stanley.

This is a partial list of participants. We also thank those who wish to remain anonymous.


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