Forecasters Anticipate Faster Pace of Economic Rebound With Stronger Labor Markets

Federal Reserve Bank of Philadelphia (05/14/21)

The outlook for the U.S. economy looks stronger now than it did three months ago, according to a survey of 36 forecasters by the Federal Reserve Bank of Philadelphia. The panel says real gross domestic product will grow at an annual rate of 7.9% this quarter, up 2.9 percentage points from the last survey. On an annual-average to annual-average basis, the forecasters expect real GDP to grow at an annual rate of 6.3% in 2021 and 4.3% in 2022. The projections for 2021 and 2022 are up from 4.5% and 3.7%, respectively, in the last survey.

The forecasters say unemployment will decrease from a projected 5.8% this quarter to 4.5% in the second quarter of 2022. On an annual-average basis, the panelists say the unemployment rate will decline from 5.5% in 2021 to 3.8% in 2024. The annual-average projections for 2021 and 2022 are each 0.4 percentage point below those of the last survey.

The forecasters have revised upward their estimates for job gains in 2021 and 2022. The projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 331,600 in 2021 and 405,100 in 2022, up from the projections of 223,400 and 329,800, respectively, from three months ago. (These annual-average projections are computed as the year-to-year change in the annual-average level of nonfarm payroll employment, converted to a monthly rate).

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