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Panelists Give Views on FOMC's Longer Run Inflation Goal

For release: 10 a.m., May 11, 2012
Contact: Marilyn Wimp, E-mail Manager of Media Relations, (215) 574-4197

Participants in the second quarter Survey of Professional Forecasters were asked whether their long-run forecasts for inflation in the price index for personal consumption expenditures (PCE) are consistent with the FOMC's longer run goal of 2 percent. Nearly three-quarters of the 31 panelists who answered the question indicated that their long forecasts for PCE inflation do not differ in an economically meaningful way from the Federal Open Market Committee's (FOMC) External Link longer run goal of 2 percent.

Notably, eight of the 31 panelists said they do not believe the FOMC will achieve its goal. These panelists, on average, think inflation in the long run will exceed 2 percent.

A total of 39 forecasters participated in the survey.


  • The outlook for growth in the U.S. economy is little changed from that of three months ago.
  • The forecasters expect real GDP to grow at an annual rate of 2.4 percent this quarter, up slightly from the previous estimate of 2.3 percent.
  • On an annual-average over annual-average basis, the forecasters see real GDP growth for 2012 and 2013, at 2.3 percent and 2.7 percent, respectively. These estimates are the same as those in the previous survey.
  • The forecasters predict real GDP will grow 3.1 percent in 2014 and 3.4 percent in 2015.
  • The forecasters have revised downward the chance of a contraction in real GDP in any of the next quarters in 2012. For the current quarter, they predict a 9.8 percent chance of negative growth, down from 13.4 percent in the survey of three months ago.

Labor Market

  • Unemployment is projected to be an annual average of 8.1 percent in 2012, before falling to 7.7 percent in 2013, 7.2 percent in 2014, and 6.6 percent in 2015. The estimates for 2012, 2013, and 2014 are 0.2 percentage point lower than the projections in the last survey.
  • Forecasters see nonfarm payroll employment growing at a rate of 164,900 jobs per month this quarter and 170,000 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 171,900 in 2012 and 175,700 in 2013.


  • Forecasters expect current-quarter headline CPI inflation to average 2.1 percent, up slightly from the last survey's estimate. They predict current-quarter headline PCE inflation of 2.0 percent, 0.3 percentage point higher than their previous estimate.
  • Measured on a fourth-quarter over fourth-quarter basis, headline CPI inflation is expected to average 2.3 percent in 2012, up from 2.0 percent in the last survey; 2.1 percent in 2013, down from 2.2 percent; and 2.5 percent in 2014, up from 2.3 percent.
  • Forecasters expect fourth-quarter over fourth-quarter headline PCE inflation to average 2.1 percent in 2012, up from 1.9 percent in the last survey; 2.0 percent in 2013, unchanged from the previous estimate; and 2.2 percent in 2014, up from 2.1 percent.

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 second quarter 2012 Survey of Professional Forecasters will be released at 10 a.m., Friday, August 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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