August 14, 2015 / 2:17 PM / 3 years ago

Economists trim third and fourth-quarter growth forecasts: Philly Fed survey

NEW YORK (Reuters) - Economists dialed back their forecasts for U.S. economic growth in the third and fourth quarter, but bumped up their growth forecast for the first quarter of 2016, according to the Philadelphia Federal Reserve’s quarterly survey released on Friday.

A money changer counts U.S. dollar bills at a currency exchange office in central Istanbul April 15, 2015. REUTERS/Murad Sezer

They made similar downward adjustments on their outlook on domestic hiring, while they stuck to their view on inflation, which they said would remain tame in the foreseeable future.

Economists see the economy growing at 2.7 percent and 2.8 percent in the current quarter and fourth quarter, respectively. This compared with median forecasts of 3.1 percent and 2.9 percent in the previous survey in May.

For the first three months of 2016, they projected U.S. gross domestic product will increase by 2.8 percent, higher than the 2.4 percent rise in the previous survey.

On annual basis, the 42 forecasters in the latest Philadelphia Fed survey pared their GDP forecast for 2015 to 2.3 percent from 2.4 percent in the prior survey. They kept to their median outlook for 2016 at 2.8 percent.

As with their GDP outlook, the analysts revised down their view on jobs growth in the second half of 2015.

They saw U.S. employers adding 222,600 workers a month in the third quarter, down from 223,300 in the prior survey. They projected a monthly pace of 220,400 jobs gain in the final quarter of 2015, slower than the 223,000 pace in the survey in May.

They upgraded their forecast on hiring in the first quarter of 2016 to 185,100 a month from a prior estimate of 177,000 a month.

The ongoing payrolls gains led forecasters to trim their view on the unemployment rate in 2015 to 5.3 percent, down from 5.4 percent in the May survey.

Forecasters saw very modest rise in inflation in the coming quarters. They forecast the consumer price index rising 0.8 percent in 2015, up slightly from the 0.7 percent increase in the May survey.

The core rate on personal consumption expenditure, the Federal Reserve’s preferred inflation gauge, was expected to rise by 1.5 percent in 2015, up from 1.4 percent in prior survey.

The forecasters expected the core PCE rising to 1.8 percent in 2016 and 1.9 percent in 2017.

Reporting by Richard Leong; Editing by Meredith Mazzilli

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