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Economists Forecast Less Risk of Economic Downturn Over the Next Year

Economists Forecast Less Risk of Economic Downturn Over the Next Year

From MarketWatch
By Greg Robb
Published: May 12, 2018 6:31 a.m. ET

Economists have trimmed their odds of an economic downturn through early 2019, according to the latest survey of professional forecasters released by the Philadelphia Fed, on Friday.

Economists now see less of a chance of a contraction in real gross domestic product in any of the next four quarters. For the current quarter, the forecasters predict only a 5.3% chance of a contraction, down from 9.1% in the survey three months ago.

In fact, Macroeconomic Advisers, which tracks quarterly growth, now sees second quarter GDP growth accelerating to a 3% annual rate after a 2.3% growth rate in the first three months of the year.

According to the survey of professional forecasters, the odds of a contraction in the third quarter were cut to 8.6% from 11.4%, to 11.1% in the fourth quarter from 13.6% and to 14.4% from 16.8% in the first three months of next year.

The odds of a contraction in GDP in the second quarter of 2019 were seen at 15.6%. This was the first estimate for the April-June 2019 period.

The economists think the U.S. economy looks slightly stronger now than it did three months ago. The forecasters expect a 2.8% growth rate in 2018, 2.7% in 2019 and 2% in 2021. The unemployment rate will hover below or at 4% through 2021.

Headline inflation, as measured by the personal consumption expenditure price index is expected to average 2.1% in 2018, up from their prior forecast of 1.9%. Inflation will average 2.1% PCE inflation in both 2019 and 2020, the forecasters said.



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