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ECONOMIC FORECASTS: First Quarter 2025 Survey of Professional Forecasters
Forecasters See Brighter Outlook for Growth and Employment in 2025
(Release date: February 14, 2025). The near-term outlook for the U.S. economy looks better now than it did three months ago, according to 40 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters predict the economy will expand at an annual rate of 2.5 percent this quarter, up from the prediction of 1.9 percent in the last survey. On an annual-average over annual average basis, the forecasters expect real GDP to increase 2.4 percent in 2025, up 0.2 percentage point from the estimate in the previous survey.
A small downward revision to the path for the unemployment rate accompanies the outlook for growth. The forecasters predict the unemployment rate will increase from 4.1 percent this quarter to 4.3 percent in the fourth quarter of 2025. In the previous survey, the unemployment rate was forecast to rise from 4.2 percent to 4.3 percent over the same period. On an annual-average basis, the forecasters expect the unemployment rate to average 4.2 percent in 2025, marking a slight downward revision from the previous estimate of 4.3 percent.
On the employment front, the forecasters predict job gains in the current quarter at a rate of 152,100 per month. The employment projections for both the current quarter and the following quarter show upward revisions from those of the previous survey. The projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 145,000 in 2025, up from the previous estimate of 134,100. (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 3.0 percent at an annual rate, up from their prediction of 2.3 percent in the previous survey. Headline PCE inflation over the current quarter will also be higher at an annual rate of 2.5 percent, up
from the previous estimate of 2.2 percent. The predictions for current-quarter core CPI and core PCE inflation are also higher compared with their predictions in the last survey.
Projections for headline and core CPI and PCE inflation at other forecast horizons have also been revised upward compared with those in the survey of three months ago.
Over the next 10 years, 2025 to 2034, the forecasters predict headline CPI inflation will be an annual-average rate of 2.30 percent. The corresponding estimate for 10-year annual-average PCE inflation is 2.11 percent. These 10-year projections are 0.07 percentage point and 0.01 percentage point higher than those of the previous survey, which covered the 10-year horizon from 2024 to 2033.
The forecasters see the risk of a downturn in real GDP this quarter at 9.7 percent, down from the previous estimate of 15.0 percent. Moreover, they have also lowered their probability estimates for negative growth for the following two quarters compared with their previous estimates.
The forecasters expect real GDP to grow at an annual-average rate of 2.10 percent over the next 10 years, slightly higher than their projection in the first-quarter survey of 2024. Ten-year annual-average productivity growth is now expected to be 1.60 percent, up from 1.50 percent previously.
Go to the Survey of Professional Forecasters to see the complete report.