The first half of 2006 are shaping up a little better, according to a quarterly survey of about 50 private-sector economists conducted by the Federal Reserve Bank of Philadelphia.
The economists now project first-quarter growth at an annualized rate of 4.4 percent, up significantly from their estimate of three months ago — 3.7 percent. They slightly raised their forecast for the second quarter to 3.4 percent, up from 3.3 percent.
The forecasters also project year-over-year growth of 3.2 percent in each of the next two years.
Given this expectation for relatively steady growth, the economists anticipate that the unemployment rate will hold at 4.8 percent over the four quarters of this year and rise just a bit, to 4.9 percent, in 2007. Previously they had expected unemployment to average 4.9 percent this year.
Regarding new jobs, the economists expect nonfarm payrolls to increase at a rate of 188,000 jobs per month this quarter, down slightly from their previous estimate of 199,000. They also forecast an average increase of 165,000 per month for the year — slightly less than their previous estimate of 172,000 — and 149,000 per month in 2007.
The consumer price index is forecast to increase at an annualized rate of 2 percent this quarter and 2.4 percent for the year. Looking out a decade ahead, the economists expect inflation to average 2.5 percent — the same rate they have forecast since this survey was first conducted in the late 1990s, according to the Philadelphia Fed.
Later this week, several key economic reports are expected, including January retail sales, on Tuesday; January industrial production, on Wednesday; housing starts and building permits, on Thursday; and the producer price index, on Friday.