The US economy is weakening, inflation will persist

The US economy is weakening, inflation will persist

The U.S. economic viewpoint has weakened and inflation is set to stay higher than recently expected for some time yet, a Federal Reserve Bank of Philadelphia review of professional financial forecasters showed on Friday. Real GDP is gauge to develop at a 2.3% yearly rate this quarter, down 1.9 rate points from the last study three months prior, with the yearly rate seen tumbling to 2.3% one year from now and 2.0% in 2024, both lower than the past gauge.

Forecasts for headline and core CPI and PCE inflation in 2022 and 2023 were also revised upward.

The Philadelphia Fed’s latest snapshot of the views of 34 leading economic forecasters also revealed they project current-quarter headline Consumer Price Index (CPI) inflation will average 7.1% at an annual rate, up from 3.8% at the time of the last survey. They also forecast headline Personal Consumption Expenditures (PCE) inflation this current quarter to be 5.7% at an annual rate, up from 3.1% previously.

Despite the weakening outlook for economic growth as the Fed battles 40-year-high inflation, the forecasters expect only a small bump in unemployment.

They see the unemployment rate at 3.6% this quarter. That’s the same level they expect in 2022 and 2023, with it only moving up to 3.8% over the following two years.

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