MNI BRIEF: Forecasters Increase Inflation Views - Philly Fed

The Philadelphia Fed's Survey of Professional Forecasters predicts PCE headline and core inflation at 3.1% this year, while estimating 10-year annual-average CPI inflation at 2.5% and seeing CPI ending 2022 at 3.8%.

Forecasters expect higher inflation in the short run, predicting current-quarter headline CPI inflation to average 5.5%, up from 3.0% in the last survey. Headline PCE inflation over the current quarter is seen at 4.7%, up 1.7ppts from the previous estimate. Over the long run, forecasters dropped their estimates of inflation slightly, predicting PCE headline inflation at 2.2% over ten years.

The survey's 36 forecasters downgraded their views of the U.S. economy, predicting real GDP will grow at an annual rate of 1.8% in the first quarter before speeding up to 4.2% in the second quarter. Forecasters also downgraded their views for the unemployment rate, expecting it to decline to 3.7% in 2022 and 3.4% in 2023 before moving slightly higher over the following two years.

In a special question done annually, forecasters dropped their estimate for median 10-year productivity growth to 1.6% from 1.75%.