3Q2011 Philly Fed Economic Forecast Revised Down

Econintersect: Econintersect endeavors to provide all credible opinions on economic forecasts.  What a difference three months makes for the 37 panelists surveyed by the Federal Reserve Bank of Philadelphia.  This third quarter 2011 forecast now shows a significantly gloomer USA economy.

Growth in the U.S. economy is predicted to be slower in the short run compared to the forecast of three months ago………  Our panelists expect real GDP to grow at an annual rate of 2.2 percent this quarter, down from the previous estimate of 3.4 percent.

On an annual-average over annual-average basis, the forecasters have also revised downward their forecasts of real GDP growth. The forecasters see real GDP growing 1.7 percent in 2011, down from their prediction of 2.7 percent in the last survey. The forecasters predict real GDP will grow 2.6 percent in 2012, 2.9 percent in 2013, and 3.1 percent in 2014.

The outlook for the labor market has deteriorated. Unemployment is projected to stand at an annual average rate of 9.0 percent in 2011, 8.6 percent in 2012, 8.1 percent in 2013, and 7.6 percent in 2014; each is higher than the forecasts from the last survey. On the jobs front, the forecasters see slower growth in jobs in 2011 and 2012 than they predicted in the last survey. The forecasters see nonfarm payroll employment growing at a rate of 105,300 jobs per month this quarter and 148,700 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 111,500 in 2011 and 150,100 in 2012, as shown in the table below. (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.)

The forecasters predict lower headline inflation in the current quarter and slightly lower headline inflation over the next five years.

source: Philly Fed