Fourth Quarter 2024 Survey of Professional Forecasters

Forecasters Predict Higher Near-Term Growth

The near-term outlook for the U.S. economy looks better now than it did three months ago, according to 33 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters predict the economy will expand at an annual rate of 2.2 percent this quarter and 1.9 percent in the first quarter of 2025, up from the predictions of 1.7 percent in the last survey. On an annual-average over annual-average basis, the forecasters expect real GDP to increase 2.7 percent in 2024 and 2.2 percent in 2025.

The forecasters see little change in the outlook for the unemployment rate from the survey of three months ago. On an annual-average basis, the forecasters expect the unemployment rate will increase from 4.0 percent in 2024 to 4.3 percent in 2025, and then decrease to 4.1 percent in 2027. These projections are within 0.1 percentage point of the projections from the last survey.

On the employment front, the forecasters also predict little change in job gains for 2024 and 2025. The projections for the annual-average level of nonfarm payroll employment imply job gains at a monthly rate of 208,400 in 2024 and 134,100 in 2025. (These annual-average projections are computed as the year-to-year change in the annual-average level of nonfarm payroll employment, converted to a monthly rate.) 

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. For 2024, the forecasters are increasing their probability estimates from the previous survey for real GDP growth in the range of 2.5 percent to 3.9 percent. Over each of the following three years, from 2025 to 2027, the forecasters are increasing their probability estimates from the survey of three months ago for real GDP growth in the range of 1.5 percent to 2.4 percent.

• Mean Probabilities for Real GDP Growth in 2024 (chart)
• Mean Probabilities for Real GDP Growth in 2025 (chart)
• Mean Probabilities for Real GDP Growth in 2026 (chart)
• Mean Probabilities for Real GDP Growth in 2027 (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 and previous estimates of the probability that unemployment will fall into each of 10 ranges. For 2024, the forecasters are raising their probability estimates from the previous survey for an unemployment rate in the range of 3.7 percent to 4.2 percent. Over each of the following three years, from 2025 to 2027, the forecasters are increasing their probability estimates from the survey of three months ago for an unemployment rate in the range of 4.3 percent to 4.8 percent.

• Mean Probabilities for Unemployment Rate in 2024 (chart)
• Mean Probabilities for Unemployment Rate in 2025 (chart)
• Mean Probabilities for Unemployment Rate in 2026 (chart)
• Mean Probabilities for Unemployment Rate in 2027 (chart)

Forecasters Lower Their Near-Term Projections for Headline Inflation

The forecasters expect current-quarter headline CPI inflation will average 2.2 percent at an annual rate, down from their prediction of 2.5 percent in the previous survey. Headline PCE inflation over the current quarter will also be slightly lower at an annual rate of 2.0 percent. The prediction for current-quarter core CPI inflation of 2.9 percent, on the other hand, is higher than that of the previous estimate of 2.6 percent.

Projections for headline and core CPI and PCE inflation in 2025 and 2026 are little changed compared with those of the previous survey.

Over the next 10 years, 2024 to 2033, the forecasters expect headline CPI inflation to average 2.23 percent at an annual rate, slightly lower than the estimate of 2.30 percent from the previous survey. The corresponding estimate for 10-year annual-average PCE inflation is 2.10 percent, unchanged from the previous prediction.

The charts below show the median projections (the red line) and the associated interquartile ranges (gray areas around the red line) for 10-year annual-average CPI and PCE inflation. The charts provide historical perspective on the current survey’s lower projection for 10-year CPI inflation and the unchanged projection for 10-year 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 each of 10 possible ranges for fourth-quarter over fourth-quarter core PCE inflation in 2024 and 2025. Notably, the panelists have raised their predictions for the probability that core PCE inflation in 2024 and 2025 will be in the range of 1.5 percent to 2.4 percent, compared with their estimates in the last survey.

• Mean Probabilities for Core PCE Inflation in 2024 (chart)
• Mean Probabilities for Core PCE Inflation in 2025 (chart)

Lower Risk of Negative Quarter-over-Quarter Growth in 2025

The forecasters see the likelihood of a downturn in real GDP this quarter at 8.9 percent, down from the previous estimate of 21.0 percent. They have also lowered their probability estimates for negative growth for the following three quarters, compared with their previous estimates.

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.

The Federal Reserve Bank of Philadelphia thanks the following forecasters for their participation in recent surveys:

William Adams, Comerica Bank; Ed Al-Hussainy and Alexander Spitz, Columbia Threadneedle Investments; Scott Anderson and Doug Porter, BMO Capital Markets; Robert J. Barbera, Johns Hopkins University Center for Financial Economics; Peter Bernstein, RCF Economic and Financial Consulting, Inc.; Wayne Best and Michael Brown, Visa, Inc.; Jay Bryson, Wells Fargo; Seth Carpenter, Morgan Stanley; Christine Chmura, Ph.D., and Xiaobing Shuai, Ph.D., Chmura Economics & Analytics; Gary Ciminero, CFA, GLC Financial Economics; Grant Collins, AIM Research, LLC; Rajeev Dhawan, Georgia State University; Bill Diviney, ABN AMRO Bank NV; Gabriel Ehrlich, Daniil Manaenkov, and Yinuo Zhang, RSQE, University of Michigan; Michael R. Englund, Action Economics, LLC; Michael Feroli, J.P. Morgan; Tani Fukui and Shan Ahmed, MetLife Investment Management; Sacha Gelfer, Bentley University; James Glassman, Independent Economist; Jan Hatzius, Goldman Sachs; Ben Herzon and Patrick Newport, S&P Global Market Intelligence; Steve Kihm, Citizens Utility Board of Wisconsin; Yaniv Konchitchki, University of California, Berkeley; Thomas Lam, Independent Economist (Singapore); Matthew Luzzetti, Deutsche Bank; Brian Martin, Australia New Zealand Bank (ANZ); Robert McNab, Old Dominion University; R. Anthony Metz, Pareto Optimal Economics, LLC; R. M. Monaco, TitanRM; Joel L. Naroff, Naroff Economics, LLC; Nomura Securities International; Brendon Ogmundson, BC Real Estate Association; Panos N. Patatoukas, U.C. Berkeley, Haas School of Business; Perc Pineda, Ph.D., Plastics Industry Association; Jason Prole, Capital Risk Management; Michael Roberts, Dan Roberts, and Jeffrey Baldwin, Roberts Capital Advisors, LLC; Parker Ross, Arch Capital Group; Philip Rothman, East Carolina University; Allen Sinai and Anqi Liu, Decision Economics, Inc.; Sean Snaith, University of Central Florida; Stephen Stanley, Santander US Capital Markets; Charles Steindel, Editor, NABE Business Economics; Susan M. Sterne, Economic Analysis Associates, Inc.; Edward Sullivan, Portland Cement Association; Patrick P. Sullivan, Sullivan Economic Consulting, LLC; Ryan Sweet, Oxford Economics USA, Inc.; Jordan Vickers and Maira Trimble, Eaton Corporation; Gary Wagner, University of Louisiana at Lafayette; Lawrence Werther, Daiwa Capital Markets America; Mark Zandi, Moody’s Analytics.

This is a partial list of participants. We also thank those who wish to remain anonymous.

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