from the Philadelphia Fed
The U.S. economy looks slightly stronger now than it did three months ago, according to 36 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters predict real GDP will grow at an annual rate of 3.0 percent this quarter and next quarter, up slightly from the estimates of three months ago.
On an annual-average over annual-average basis, the forecasters predict real GDP growing 2.8 percent in 2018, 2.7 percent in 2019, 1.9 percent in 2020, and 2.0 percent in 2021.
The forecasters see a marginally brighter outlook for the unemployment rate. The forecasters predict the unemployment rate will average 3.9 percent in 2018, 3.7 percent in 2019, 3.9 percent in 2020, and 4.0 percent in 2021. The projections for 2018 and 2019 are slightly below those of the last survey, indicating a better outlook for unemployment.
The panelists also predict an improvement in employment for 2018 and 2019. The projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 185,900 in 2018, up from the previous estimate of 175,100, and 160,800 in 2019, up from 150,300 estimated three months ago. (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.)
Real GDP (%) | Unemployment Rate (%) | Payrolls (000s/month) | ||||
---|---|---|---|---|---|---|
Previous | New | Previous | New | Previous | New | |
Quarterly data: | ||||||
2018:Q2 | 2.9 | 3.0 | 4.0 | 3.9 | 171.1 | 181.0 |
2018:Q3 | 2.8 | 3.0 | 3.9 | 3.9 | 168.7 | 175.0 |
2018:Q4 | 2.5 | 2.8 | 3.8 | 3.8 | 151.8 | 160.4 |
2019:Q1 | 2.4 | 2.4 | 3.8 | 3.8 | 172.9 | 160.9 |
2019:Q2 | N.A. | 2.6 | N.A. | 3.7 | N.A. | 151.7 |
Annual data (projections are based on annual-average levels): | ||||||
2018 | 2.8 | 2.8 | 4.0 | 3.9 | 175.1 | 185.9 |
2019 | 2.5 | 2.7 | 3.8 | 3.7 | 150.3 | 160.8 |
2020 | 2.0 | 1.9 | 3.9 | 3.9 | N.A. | N.A. |
2021 | 1.7 | 2.0 | 4.0 | 4.0 | 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. The charts show that the probabilities for the next four years are similar to those of the previous survey.
- Mean Probabilities for Real GDP Growth in 2018 (chart)
- Mean Probabilities for Real GDP Growth in 2019 (chart)
- Mean Probabilities for Real GDP Growth in 2020 (chart)
- Mean Probabilities for Real GDP Growth in 2021 (chart)
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 charts show the panelists are raising their density estimates for an unemployment rate below 4.0 percent from 2018 to 2021.
- Mean Probabilities for Unemployment Rate in 2018 (chart)
- Mean Probabilities for Unemployment Rate in 2019 (chart)
- Mean Probabilities for Unemployment Rate in 2020 (chart)
- Mean Probabilities for Unemployment Rate in 2021 (chart)
Higher Inflation in 2018
The forecasters expect current-year headline CPI inflation to average 2.5 percent, up from 2.1 percent in the last survey. Headline PCE inflation for 2018 will be 2.1 percent, up 0.2 percentage point from the previous estimate.
However, the forecasters’ projections for inflation beyond 2018 are mostly unchanged compared with the previous survey. Headline CPI inflation is expected to average 2.2 percent in 2019 and 2.3 percent in 2020, unchanged from the last survey. The forecasters have revised slightly their projections for headline PCE inflation in 2019 and 2020 to 2.1 percent, from 2.0 percent previously.
Over the next 10 years, 2018 to 2027, the forecasters expect headline CPI inflation to average 2.30 percent at an annual rate, up marginally from the previous estimate of 2.25 percent. The corresponding estimate for 10-year annual-average PCE inflation is 2.00 percent, unchanged from the estimate of three months ago.
Headline CPI | Core CPI | Headline PCE | Core PCE | |||||
---|---|---|---|---|---|---|---|---|
Previous | Current | Previous | Current | Previous | Current | Previous | Current | |
Quarterly | ||||||||
2018:Q2 | 2.0 | 1.9 | 2.1 | 2.2 | 1.9 | 2.0 | 1.9 | 2.0 |
2018:Q3 | 2.3 | 2.2 | 2.2 | 2.3 | 1.9 | 2.0 | 1.9 | 2.1 |
2018:Q4 | 2.2 | 2.3 | 2.2 | 2.3 | 1.9 | 2.0 | 1.9 | 2.1 |
2019:Q1 | 2.3 | 2.3 | 2.3 | 2.4 | 2.0 | 2.1 | 2.0 | 2.1 |
2019:Q2 | N.A. | 2.2 | N.A. | 2.4 | N.A. | 2.0 | N.A. | 2.0 |
Q4/Q4 Annual Averages | ||||||||
2018 | 2.1 | 2.5 | 2.2 | 2.5 | 1.9 | 2.1 | 1.9 | 2.2 |
2019 | 2.2 | 2.2 | 2.3 | 2.4 | 2.0 | 2.1 | 2.0 | 2.1 |
2020 | 2.3 | 2.3 | 2.4 | 2.4 | 2.0 | 2.1 | 2.0 | 2.1 |
Long-Term Annual Averages | ||||||||
2018-2022 | 2.20 | 2.20 | N.A. | N.A. | 2.00 | 2.00 | N.A. | N.A. |
2018-2027 | 2.25 | 2.30 | N.A. | N.A. | 2.00 | 2.00 | N.A. | N.A. |
The charts below show the median projections (the 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 slightly higher level of the long-term projection for CPI inflation and an unchanged long-term projection for PCE inflation.
- Projections for the 10-Year Annual-Average Rate of CPI Inflation (chart)
- Projections for the 10-Year Annual-Average Rate of PCE Inflation (chart)
The figures below show the probabilities that the forecasters are assigning to the possibility that fourth-quarter over fourth-quarter core PCE inflation in 2018 and 2019 will fall into each of 10 ranges. For both years, the forecasters have increased the probability that core PCE inflation will be above 2.0 percent, compared with their estimates in the survey of three months ago.
- Mean Probabilities for Core PCE Inflation in 2018 (chart)
- Mean Probabilities for Core PCE Inflation in 2019 (chart)
Low Risk of a Negative Quarter
The forecasters have revised downward the chance of a contraction in real GDP in any of the next four quarters. For the current quarter, the forecasters predict a 5.3 percent chance of negative growth, down from 9.1 percent in the survey of three months ago. The panelists have also made downward revisions to their probability estimates for the next three quarters.
Quarterly data: | Previous | New |
---|---|---|
2018:Q2 | 9.1 | 5.3 |
2018:Q3 | 11.4 | 8.6 |
2018:Q4 | 13.6 | 11.1 |
2019:Q1 | 16.8 | 14.4 |
2019:Q2 | N.A. | 15.6 |
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.
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; Gregory Daco, Oxford Economics USA, Inc.; Rajeev Dhawan, Georgia State University; Gabriel Ehrlich, Daniil Manaenkov, 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, IHS Markit; 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; Mark Zandi, Moody’s Analytics.
This is a partial list of participants. We also thank those who wish to remain anonymous.
Source
https://www.philadelphiafed.org/research-and-data/real-time-center/survey-of-professional-forecasters/2018/survq118? utm_campaign=SPF &utm_source=2018/02/09 &utm_media=Email
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