Magazine article Mortgage Banking

Forecasters Raise Near-Term Estimates for Economic Growth

Magazine article Mortgage Banking

Forecasters Raise Near-Term Estimates for Economic Growth

Article excerpt

Expect to see faster economic growth over the next several quarters than previously estimated, while measures of core inflation in the U.S. economy will decelerate in 2007 and hold nearly steady through 2009, according to 49 forecasters surveyed by the Federal Reserve Bank of Philadelphia.

The Philadelphia Fed's quarterly forecast predicted that on a year-over-year basis, real gross domestic product (GDP) would grow 2.8 percent in 2007, up from the forecasters' previous estimate of 2.6 percent. A slightly stronger labor market will accompany the outlook for growth.

Non-farm payroll employment will increase at a rate of 135,000 jobs per month in 2007, up from 119,000 previously, while the unemployment rate will average 4.7 percent, down from 4.8 percent for the year. The forecasters predict real GDP will grow 3 percent in 2008 and the unemployment rate will rise to 4.8 percent.

Meanwhile, measured on a fourth-quarter-over-fourth-quarter basis, core CPI inflation will fall to 2.3 percent in 2007 and hold steady at that rate in 2008 and 2009. An alternative measure of core inflation, the rate of change in the price index for personal consumption expenditures (PCE), is also expected to decelerate, to 2 percent in 2007 before rising to 2. …

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