Analysts have projected that the U.S. economy will face slower growth and higher inflation at year-end, showed a survey released on Monday by the National Association for Business Economics (NABE).
The median forecast for the inflation-adjusted gross domestic product (GDP) of this year’s fourth quarter is a 1.8-per cent increase from the same period of 2021.
The survey showed as it was compared with a median projection of 2.9 per cent in February.
“77 per cent of the panellists indicated the risks to U.S. economic growth were tilted to the downside this year, with monetary policy missteps representing the greatest downside risk.’’
NABE Outlook Survey Chair Yelena Shulyatyeva, a senior U.S. economist at Bloomberg Economics has said.
The lower growth forecast occured against the backdrop of the rising geopolitical uncertainty, surging inflation in the country and a more volatile global market.
The NABE survey conducted on May 2-10 presented the consensus macroeconomic forecast of a panel of 53 professional forecasters.
NABE panellists had raised their projections for both the consumer price index (CPI) and the personal consumption expenditures (PCE) price index, the Fed’s preferred gauge to measure the level of inflation.
According to the survey, the CPI is projected to rise 5.6 per cent year-on-year in the fourth quarter of this year, two percentage points higher than the median 3.6-per cent forecasted in the February survey.
Meanwhile, nearly 90 per cent of panellists anticipated the core PCE inflation rate would peak by this year’s end.
“NABE Outlook Survey panellists continue to ratchet up their expectations for inflation rates in both 2022 and 2023,’’ NABE President David Altig said.
Altig also served as the executive vice president and director of research at the Federal Reserve Bank of Atlanta.
In a webinar on Monday, Shulyatyeva noted that it was important that the whole forecast horizon was lifted higher, while participants continued to downgrade economic growth.
On a possible economic recession in the United States, 53 per cent of respondents assigned a more than 25 per cent probability of a recession occurring within the next 12 months.
An additional 40 per cent of the panel suggested the possibility was between 11 per cent and 25 per cent, the survey found.
Just over a quarter of panellists believed a recession would occur in the second half of next year, while 25 per cent expected a recession either by this year’s end or in the first half of next year.
One-third of panellists suggested a recession would not occur until 2024 or later, the survey said.
“What we found out was that there was so much uncertainty about this question that some answers may seem contradictory,’’ Shulyatyeva said.
