FED Philadelphia: US economy is strengthening, but progress in the face of inflation will be irregular

The economic prospects of USA have improved slightly and a key measure of inflation will continue its downward trend, a survey carried out by the Federal Reserve Bank of Philadelphia among experts in economic forecasting.

The survey expects real GDP to grow at an annual rate of 1.3% this quarter, 0.1 percentage point higher than in the survey three months ago, and for the annual rate to rise to 1.7% by the end of 2024.

The Philadelphia Fed survey, which gathers the opinions of 34 of the leading experts in economic forecasting, also revealed that they project progress in the US central bank’s battle to reduce the inflation to its target rate of 2%, although progress will be patchy.

For example, headline Consumer Price Index (CPI) inflation for the current quarter will average 3.3% annually, down from 2.9% in the last survey, but will fall below previous estimates in the third quarter. of next year.

Similarly, they expect headline personal consumption expenditure (PCE) inflation this quarter to be 2.9% annually, slightly above the previous 2.8%, but with a similar drop below previous estimates for the third quarter. of 2024.

Much better news for the Federal Reserve is that analysts foresee a more direct advance in the so-called measures of underlying inflation, both the CPI and the PCE, which exclude the most volatile components of food and energy.

Core CPI will be at 3.0% annually this quarter, down from 3.2% in the last survey, while core PCE will decline to 2.7% this quarter, down from 2.8% previously. By the end of 2024, the underlying CPI is expected to be 2.3% at an annual rate and the underlying PCE at 2.2%.

Analysts predict a slight increase in unemployment despite the Fed’s most aggressive tightening cycle in a generation. The unemployment rate will be 3.9% this quarter, 0.2% higher than the previous estimate. They expect it to rise to 4.2% by the end of next year.

Source: Reuters