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First Quarter 2024 Survey of Professional Forecasters

The latest survey conducted by the Federal Reserve Bank of Philadelphia indicates a more optimistic near-term outlook for the U.S. economy compared to three months ago. Thirty-four forecasters participated in the survey, and their projections paint a picture of higher output growth and a brighter labor market in 2024.
 
In terms of economic expansion, the forecasters anticipate that the U.S. economy will grow at an annual rate of 2.1 percent in the current quarter. This figure represents a significant upward revision from the previous prediction of 0.8 percent in the last survey. Moreover, the forecasters foresee real GDP to increase by 2.4 percent on an annual-average over annual-average basis for the year 2024, marking a 0.7 percentage point increase from the previous estimate.
 
Accompanying the positive growth outlook is a downward revision in the forecast for the unemployment rate. The forecasters project that the unemployment rate will rise from its current level of 3.8 percent to 4.0 percent by the fourth quarter of 2024. However, this represents a more favorable trajectory compared to the previous survey, where the unemployment rate was expected to reach 4.2 percent over the same period. On an annual-average basis, the forecasters anticipate the unemployment rate to average 3.9 percent in 2024, reflecting a downward revision from the previous estimate of 4.1 percent.
 
Overall, the survey results suggest an improving economic landscape characterized by higher output growth and a more favorable labor market outlook. These projections provide valuable insights for policymakers, businesses, and individuals as they navigate the economic environment in the coming months.
 
The employment projections provided by the forecasters in the current survey indicate positive trends in job gains for the U.S. economy. In the current quarter, the forecasters anticipate job gains at a rate of 235,800 per month, reflecting an upward revision from previous estimates. Furthermore, projections for the subsequent three quarters also show upward revisions compared to the previous survey.
 
Looking at the annual-average level of nonfarm payroll employment for 2024, the forecasters expect job gains at a monthly rate of 190,000, which is a notable increase from the previous estimate of 120,000. These annual-average projections are calculated based on the year-to-year change in the annual-average level of nonfarm payroll employment, converted to a monthly rate.
 
The forecasters’ assessments regarding the rate of growth in the annual-average level of real GDP are illustrated through charts provided in the survey. These charts offer insight into the degree of uncertainty surrounding the forecasters’ projections for real GDP growth. Notably, for the year 2024, the forecasters are substantially increasing their probability estimates from the previous survey for real GDP growth falling into the range of 1.5 percent to 3.9 percent.
 
These adjustments in the probability estimates indicate a growing confidence among forecasters regarding the U.S. economy’s potential for moderate to robust growth in 2024. Such insights are valuable for policymakers, businesses, and investors as they formulate strategies and make decisions based on the evolving economic landscape.
 
The forecasters’ density projections for unemployment, as illustrated below, provide valuable insights into the uncertainty surrounding the labor market for the next four years. Each chart displays the forecasters’ current and previous estimates of the probability that the unemployment rate will fall into each of 10 ranges. Notably, for the year 2024, the forecasters are increasing their probability estimates from the previous survey for an unemployment rate in the range of 3.0 percent to 3.9 percent.
 
These adjustments in probability estimates suggest that forecasters are reassessing their expectations regarding the unemployment rate in 2024, indicating a higher likelihood of unemployment falling within the 3.0 percent to 3.9 percent range compared to previous assessments. This shift underscores the dynamic nature of economic forecasting and the recognition of evolving factors that may influence labor market dynamics in the years ahead.
 
Understanding the level of uncertainty surrounding unemployment projections is crucial for policymakers, businesses, and individuals as they navigate the economic landscape and make informed decisions regarding workforce planning, investment, and policy formulation. By acknowledging and analyzing these density projections, stakeholders can better anticipate and respond to potential changes and challenges in the labor market environment.

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