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ECONOMIC FORECASTS: Fourth Quarter 2024 Survey of Professional Forecasters
Forecasters Predict Higher Near-Term Growth, Lower Headline Inflation, and Lower Risk of a Negative Quarter in 2025
[Source: Federal Reserve Bank of Philadelphia’s Survey of Professional Forecasters; Release date November 15, 2024] 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 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 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.
Go to the Federal Reserve Bank of Philadelphia’s Survey of Professional Forecaster to see the complete report.