Forecasters are scaling back expectations for growth and inflation in the first half of 2009, as an ongoing weak economy weighs heavily on prospects for the timing of a recovery.
According to the Philadelphia Fed's survey of forecasters, economists expect Q1 GDP will decline 5.2% compared to a previous expectation of a 1.1% contraction, while Core PCE (the Fed's favoured inflation measure) is expected to average 0.6% in Q1, down from 2.0% previously.
The report also suggests a 7.8% unemployment rate in Q1 compared to a previous expectation for 7.0%.
For Q2, the report suggests a 1.8% decline in GDP versus a previous expectation of a 0.8% gain, while Core PCE is expected to average 0.7% in Q2, down from a previous forecast of 1.6%.
The survey also suggests expectations for an 8.4% unemployment rate in the United States in the second quarter and that forecasters expect the fiscal stimulus package to add 0.9% to GDP in 2009.
By Erik Kevin Franco and edited by Stephen Huebl
©CEP News Ltd. 2009