from the Philadelphia Fed
The participants in the June Livingston Survey predict sharply lower output growth for the first half of 2020. The forecasters, who are surveyed by the Federal Reserve Bank of Philadelphia twice a year, project that the economy’s output (real GDP) will fall at an annual rate of -20.2 percent during the first half of 2020. The economy is expected to start recovering in the second half of 2020. Growth in the second half of 2020 is expected to rise to an annual rate of 9.6 percent. Growth will average an annual rate of 7.2 percent in the first half of 2021.
The forecasters see a high unemployment rate in the first half of 2020, with recovery starting in the second half of 2020. The forecasters predict that the unemployment rate will be 17.4 percent in June 2020 and 10.6 percent in December 2020. The unemployment rate is expected to fall to 8.3 percent in June 2021.
Forecasters Cut Their Projections for Inflation in 2020
On an annual-average over annual-average basis, CPI inflation is expected to be 0.8 percent in 2020 and 1.6 percent in 2021. Both projections were revised downward from the forecasts in the December 2019 survey. PPI inflation for finished goods is expected to be -2.1 percent this year, a notable downward revision from 1.7 percent in the previous survey. The forecasters predict PPI inflation will rise to 2.2 percent for 2021.
Sharply Lower Projections for Short- and Long-Term Interest Rates
The panelists sharply lowered their forecasts for interest rates on three-month Treasury bills over those of six months ago. At the end of June 2020, the interest rate on three-month Treasury bills is predicted to be 0.13 percent. The forecasters predict that the three-month rate will be 0.14 percent at the end of December 2020, and they expect it to be 0.20 percent at the end of December 2021. Accompanying the notable downward revisions to the rate on three-month Treasury bills, the forecasts for the 10-year Treasury rate were also sharply lower. The interest rate on 10-year Treasury bonds is predicted to reach 0.70 percent at the end of June 2020. The forecasters predict the 10-year rate will rise to 0.81 percent at the end of December 2020 and continue to rise to 1.07 percent at the end of June 2021. The 10-year Treasury bond interest rate is expected to reach 1.26 percent at the end of December 2021.
Notable Revisions to Long-Term Growth and Inflation
The forecasters predict that real GDP will grow at an annual average rate of 2.20 percent over the next 10 years, an upward revision from 2.00 in the survey six months ago. The forecasters now predict that inflation (measured by the CPI) will be 2.00 percent annually over the next 10 years, a downward revision from 2.22 in the December 2019 survey.
Forecasters Cut Their Projections for Stock Prices but Continue to See Rising Stock Prices This Year and Next
The panelists predict the S&P 500 index will finish the first half of 2020 at a level of 3050.0. Stock prices are expected to rise to 3117.5 at the end of 2020 and continue to rise to 3215.0 at the end of June 2021. The index is forecasted to reach 3280.0 by the end of 2021.
Technical Notes
This survey release reports the median value across the 20 forecasters on the survey’s panel.
Source
include(“/home/aleta/public_html/files/ad_openx.htm”); ?>
