Economists polled by the Philadelphia Fed lowered their US economic growth outlook for the next two years as the labour market was forecast weaker than anticipated, a survey released on Monday showed. The Philadelphia Federal Reserve's fourth-quarter survey of 45 forecasters showed gross domestic product was expected to grow at an average annual rate of 2.4 percent in 2012, down from an estimate of 2.6 percent in the third-quarter survey.
Growth for 2013 was lowered to 2.7 percent from 2.9 percent. For the current quarter, the growth forecast held steady at 2.6 percent, while the estimate for 2011 was nudged up to 1.8 percent from 1.7 percent. The outlook for the job market also deteriorated with the unemployment rate expected to average 8.8 percent next year, up from an earlier forecast of 8.6 percent. That suggests job gains at a monthly rate of 123,200 in 2012.
The outlook for 2013 was lifted to 8.4 percent from 8.1 percent, while unemployment expectations for the fourth quarter and 2011 overall were unchanged at 9.0 percent. Forecasters' short-term inflation expectations were little changed, with 2012's annual average lowered slightly to 1.9 percent from 2.0 percent. The forecast for core inflation, which strips out volatile items including food and gasoline, was unchanged at 1.8 percent.
Consumer prices for 2011 were seen at 3.6 percent, up from an earlier estimate of 3.2 percent. While growth was expected to be slower, economists saw less chance of contraction in the coming quarters. The risk of contraction in the current quarter was lowered to 11.8 percent from 20.9 percent, and the first quarter had a 16.6 percent likelihood, down from 20.8 percent.
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