Economists Cut US GDP Forecast, Raise Inflation Forecast
Here is a headline news story that I found interesting for reasons I will explain following: Economists cut U.S. Q4 growth forecasts.
Economists expect the economy to grow at an annual rate of 1.8 percent in the current quarter, down from the previous estimate of 2.2 percent growth, according to the Philadelphia Federal Reserve’s fourth-quarter survey of 39 forecasters.
While that left estimates for gross domestic product for the year unchanged at 2.2 percent, growth in 2013 looked modestly weaker with economists forecasting 2 percent, down from 2.1 percent.
Over the next three quarters, growth was seen averaging 2.1 percent, down from earlier expectations of 2.2 percent.
The unemployment rate was forecast to come in lower than expected, averaging 7.9 percent in the fourth quarter from the previous estimate of 8.1 percent. The monthly unemployment rate released by the government was 7.9 percent in October.
Still, unemployment was seen stuck at 7.9 percent in the first quarter of next year, and holding at 7.8 percent in the second and third quarters.
Economists raised their forecasts for inflation this quarter with the headline consumer price index seen averaging 2.3 percent, up from earlier estimates for 2.0 percent. For the year, CPI was expected to average 1.9 percent, up from 1.8 percent.
Given exports were recently revised up and imports revised lowered, I expected economists to think GDP would come in higher. It would have been interesting to see their reasons. Hurricane Sandy perhaps?
I expect the economy to weaken of course (and by far more in 2013 than the economists). Curiously the economists do not seem worried about the alleged fiscal cliff, at least for their GDP estimates.
For more on the fiscal cliff, please see “Saturation Point” for QE Nonsense; Fiscal Cliff Comparisons.
Mike “Mish” Shedlock