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Forecasters: Lower Growth, Higher Unemployment over the Next Two Years

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Contact: Katherine Dibling, E-mail senior media representative, (215) 574-4119

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The outlook for growth and unemployment in the U.S. economy looks a little weaker now than it did three months ago, according to 45 participants in the Fourth Quarter Survey of Professional Forecasters.


  • The forecasters see real GDP growing at an annual rate of 2.6 percent this quarter, unchanged from the previous estimate.
  • The forecasters see real GDP growing 1.8 percent in 2011. Three months ago, they expected 1.7 percent.
  • The forecasters predict real GDP will grow 2.4 percent in 2012, 2.7 percent in 2013, and 3.5 percent in 2014.

Labor Market

  • Unemployment is projected to stand at an annual average rate of 9.0 percent in 2011, falling to 8.8 percent in 2012, 8.4 percent in 2013, and 7.8 percent in 2014. The forecast for 2011 is the same as in the previous survey, but projections for the other years are higher than the forecasts from the last survey.
  • The forecasters have reduced their expectations for job growth over the next two years. They see nonfarm payroll employment growing at a rate of 115,300 jobs per month this quarter and 121,000 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 106,500 in 2011 and 123,200 in 2012.


  • The forecasters have left their short-term projections for inflation in 2012 and 2013 nearly unchanged from their previous projections.
  • Headline CPI inflation in 2012 will average 1.9 percent, down from 2.0 percent previously. Headline CPI inflation will rise to 2.2 percent in 2013, up 0.1 percentage point from the previous estimate. Core CPI inflation in 2012 will average 1.8 percent, unchanged from the previous survey, and rise to 2.0 percent in 2013.
  • Headline PCE inflation is expected to average 2.8 percent in 2011, 1.7 percent in 2012, and 2.0 percent in 2013, compared to the forecasts of 2.5 percent, 1.8 percent, and 2.0 percent, respectively, in the last survey. Core PCE inflation is expected to average 1.8 in 2011, 1.6 in 2012, and 1.8 in 2013, largely unchanged from last quarter's survey forecasts.

Assistant Director and Manager, Real-Time Data Research Center, Tom Stark:

'The outlook for growth and unemployment in the U.S. economy looks a little weaker now than it did three months ago. However, the forecasters see a lower risk of a downturn over the next four quarters. For the current quarter, the forecasters peg the odds of a downturn at 11.8 percent, down from the 20.9 percent they saw three months ago."

The Survey of Professional Forecasters is a quarterly survey of economic forecasters from across the country. Participants are asked to provide their projections for a broad range of macroeconomic variables including real GDP, nonfarm payroll employment, and inflation indicators such as CPI and PCE. It is the oldest survey of macroeconomic forecasts in the United States. The survey began in 1968 and was conducted by the American Statistical Association and the National Bureau of Economic Research. The Federal Reserve Bank of Philadelphia took over the survey in 1990. The first quarter 2012 Survey of Professional Forecasters will be released at 10 a.m., Friday, February 10, 2012. See the schedule of releases.

The Federal Reserve Bank of Philadelphia helps formulate and implement monetary policy, supervises banks and bank and savings and loan holding companies, and provides financial services to depository institutions and the federal government. It is one of the 12 regional Reserve Banks that, together with the Board of Governors in Washington, D.C., make up the Federal Reserve System. The Philadelphia Federal Reserve Bank serves eastern Pennsylvania, southern New Jersey, and Delaware.


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