The US economy is now expected to narrowly avoid a recession this year, but core inflation will be faster than expected, according to a monthly survey of economists.
The June survey showed that GDP is now expected to contract in the last three months of the year, and is expected to contract only in the third quarter instead of shrinking.
While estimates for the current quarter and the next quarter were set due to strong consumer spending and upward revisions to business investments, GDP growth is seen a little weaker until the end of 2024, according to “Bloomberg”.
Economists see the index of personal consumption expenditures prices, excluding food and energy, rising at a faster pace over the next year than they did in the May survey.
This also supports the point of view of the US Federal Reserve, which supports the assertion of policymakers that two more rate increases will most likely be appropriate this year.
Economists see a further rise in prices in the third quarter, with the federal funds rate remaining in the range of 5.25-5.5% until the end of the year before an expected quarter-point cut in early 2024, according to the average forecast.
Forecasters see an increase in employment this year and next, and also expect the unemployment rate to peak at a slightly lower level. This helps explain the outlook for sustainable consumer spending.
