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First Quarter 2019 Survey of Professional Forecasters

Lower Near-Term Output Growth

The U.S. economy looks weaker now in the next few quarters than it did four months ago, according to 38 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters predict real GDP will grow at an annual rate of 1.5 percent this quarter and 2.4 percent next quarter, down from the previous estimates of 2.4 percent and 2.7 percent, respectively. On an annual-average over annual-average basis, the forecasters predict real GDP to grow 2.4 percent in 2019, 2.0 percent in 2020, and 1.8 percent in 2021. The projection for 2019 is 0.3 percentage point lower than the estimate of four months ago, while the projections for 2020 and 2021 are roughly unchanged.

A slightly weaker outlook for the unemployment rate for the next few quarters accompanies the weaker outlook for near-term output growth. The forecasters predict the unemployment rate will average 3.7 percent in 2019 and 2020, 4.0 percent in 2021, and 4.2 percent in 2022.

The panelists, however, see somewhat stronger growth in employment this year than they predicted previously. The projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 191,800 in 2019, up from the previous estimate of 181,900. (These annual-average estimates are computed as the year-to-year change in the annual-average level of nonfarm payroll employment, converted to a monthly rate.)

Median Forecasts for Selected Variables in the Current and Previous Surveys
Real GDP (%)
Unemployment Rate (%)
Payrolls (000s/month)
Quarterly data:
2019:Q1 2.4 1.5 3.7 3.9 172.4 198.9
2019:Q2 2.7 2.4 3.6 3.7 168.1 156.8
2019:Q3 2.4 2.2 3.6 3.7 159.7 168.5
2019:Q4 2.2 2.2 3.6 3.7 142.9 142.1
2020:Q1 N.A. 2.1 N.A. 3.7 N.A. 143.6
Annual data (projections are based on annual-average levels):
2019 2.7 2.4 3.7 3.7 181.9 191.8
2020 2.1 2.0 3.8 3.7 N.A. 123.2
2021 1.7 1.8 4.0 4.0 N.A. N.A.
2022 N.A. 2.1 N.A. 4.2 N.A. N.A.

The charts below provide some insight into the degree of uncertainty the forecasters have about their projections for the rate of growth in the annual-average level of real GDP. Each chart (except the one for 2022) presents the forecasters’ previous and current estimates of the probability that growth will fall into each of 11 ranges. The charts show the forecasters have revised downward their estimates of the probability that real GDP will grow above 3.0 percent in any of the next three years, especially in 2019.

The forecasters’ density projections for unemployment, shown below, shed light on uncertainty about the labor market over the next four years. Each chart presents the forecasters’ estimates of the probability that unemployment will fall into each of 10 ranges. The charts show that the estimates of uncertainty about the unemployment rate over the next three years have changed little from those in the previous survey.

Downward Revisions to 2019 Headline Inflation

The forecasters expect current-quarter headline CPI inflation to average 1.1 percent, down from 2.4 percent in the last survey, and 2.0 percent in 2019, down from 2.3 percent previously. Headline PCE inflation for the current quarter will be 1.4 percent, down 0.8 percentage point from the previous estimate. For 2019, the panelists see headline PCE inflation at 1.9 percent, marking a downward revision from 2.1 percent.

The projections for core CPI and PCE inflation at all horizons are little changed from those of the previous survey. Measured on a fourth-quarter over fourth-quarter basis, core CPI inflation is expected to average 2.3 percent in each of the next three years. The projections for core PCE inflation are 2.0 percent for 2019, 2.1 percent for 2020, and 2.0 percent for 2021.

Over the next 10 years, 2019 to 2028, the forecasters expect headline CPI inflation to average 2.20 percent at an annual rate. The corresponding estimate for 10-year annual-average PCE inflation is 2.00 percent.

Median Short-Run and Long-Run Projections for Inflation (Annualized Percentage Points)
Headline CPI
Core CPI
Headline PCE
Core PCE
2019:Q1 2.4 1.1 2.3 2.4 2.2 1.4 2.1 2.0
2019:Q2 2.3 2.3 2.3 2.2 2.1 2.1 2.1 2.0
2019:Q3 2.3 2.3 2.4 2.3 2.1 2.1 2.1 2.0
2019:Q4 2.4 2.2 2.4 2.3 2.1 2.1 2.1 2.0
2020:Q1 N.A. 2.3 N.A. 2.3 N.A. 2.2 N.A. 2.1
Q4/Q4 Annual Averages
2019 2.3 2.0 2.4 2.3 2.1 1.9 2.1 2.0
2020 2.3 2.2 2.4 2.3 2.1 2.0 2.1 2.1
2021 N.A. 2.2 N.A. 2.3 N.A. 2.1 N.A. 2.0
Long-Term Annual Averages
2018-2022 2.25 N.A. N.A. N.A. 2.10 N.A. N.A. N.A.
2019-2023 N.A. 2.13 N.A. N.A. N.A. 2.00 N.A. N.A.
2018-2027 2.21 N.A. N.A. N.A. 2.01 N.A. N.A. N.A.
2019-2028 N.A. 2.20 N.A. N.A. N.A. 2.00 N.A. N.A.

The charts below show the median projections (the red line) and the associated interquartile ranges (gray areas around the red line) for the projections for 10-year annual-average CPI and PCE inflation. The charts highlight the nearly unchanged projections for the long-term CPI and PCE inflation, compared with those of the previous survey.

The figures below show the probabilities that the forecasters are assigning to the possibility that fourth-quarter over fourth-quarter core PCE inflation in 2019 and 2020 will fall into each of 10 ranges. For 2019, the forecasters have increased the probability that core PCE inflation will be below 2.0 percent, compared with their estimates in the survey of three months ago.

Lower Risk of a Negative Quarter Beyond the Current Quarter

The forecasters have revised downward the chance of a contraction in real GDP in any of the three quarters following the first quarter of 2019. For the current quarter, the forecasters predict a 16.7 percent chance of negative growth, up from 10.6 percent in the previous survey.

Risk of a Negative Quarter (%)
Survey Means
Quarterly data: Previous New

Forecasters State Their Views on House Price Growth over the Next Two Years

In a special question in this survey, panelists were asked to provide their forecasts for fourth-quarter over fourth-quarter growth in house prices, as measured by a number of alternative indices. The panelists were allowed to choose their measure from a list of indices or to write in their own index. For each index of their choosing, the panelists provided forecasts for growth in 2019 and 2020.

Twenty panelists answered the special question. Some panelists provided projections for more than one index. The table below provides a summary of the forecasters’ responses. The number of responses (N) is low for each index. The median estimates for the six house-price indices listed in the table below range from 3.9 percent to 4.7 percent in 2019 and from 2.6 percent to 4.0 percent in 2020.

Projections for Growth in Various Indices of House Prices
Q4/Q4, Percentage Points
(Q4/Q4 Percent Change)
(Q4/Q4 Percent Change)
S&P CoreLogic Case-Shiller: U.S. National
S&P CoreLogic Case-Shiller: Composite 10
S&P CoreLogic Case-Shiller: Composite 20
FHFA: Purchase Only (U.S. Total)
CoreLogic: National HPI, incl. Distressed Sales (Single Family Combined)
NAR Median: Total Existing

Forecasters See Lower 10-Year Growth in Output and Productivity and in Returns to Financial Assets

In our first-quarter surveys, the forecasters provide their 10-year annual-average projections for an expanded set of variables, including growth in output and productivity, as well as returns on financial assets.

As the table below shows, the forecasters have cut their estimates for the annual-average rate of growth in real GDP over the next 10 years. Currently, the forecasters expect real GDP to grow at an annual-average rate of 1.99 percent over the next 10 years, down from their projection of 2.15 percent in the first-quarter survey of 2018. Ten-year annual-average productivity growth is now expected to be 1.35 percent, down from 1.50 percent previously.

Downward revisions to the return on the financial assets accompany the current outlook. The forecasters predict the S&P 500 returning an annual-average 5.35 percent over the next 10 years, down from 6.00 percent. The forecasters see the rate on 10-year Treasuries averaging 3.50 percent over the next 10 years, down from 3.70 percent in last year’s first-quarter survey. Three-month Treasury bills will return an annual-average 2.75 percent over the next 10 years, unchanged from last year’s first-quarter survey.

Median Long-Term (10-Year) Forecasts (%)
  First Quarter 2018 Current Survey
Real GDP Growth
Productivity Growth
Stock Returns (S&P 500)
Rate on 10-Year Treasury Bonds
Bill Returns (3-Month)


Technical Notes

Moody's Aaa and Baa Historical Rates

The historical values of Moody's Aaa and Baa rates are proprietary and, therefore, not available in the data files on the Bank’s website or on the tables that accompany the survey’s complete write-up in the PDF.

The release of the first quarter 2019 Survey of Professional Forecasters on March 22, 2019, is later than usual due to the partial federal government shutdown late last year through early this year.

The Federal Reserve Bank of Philadelphia thanks the following forecasters for their participation in recent surveys:

Lewis Alexander, Nomura Securities; Scott Anderson, Bank of the West (BNP Paribas Group); Robert J. Barbera, Johns Hopkins University Center for Financial Economics; Peter Bernstein, RCF Economic and Financial Consulting, Inc.; Jay Bryson, Wells Fargo; Christine Chmura, Ph.D., and Xiaobing Shuai, Ph.D., Chmura Economics & Analytics; Gary Ciminero, CFA, GLC Financial Economics; Nathaniel Curtis, Ankura Consulting Group, LLC; Gregory Daco, Oxford Economics USA, Inc.; Rajeev Dhawan, Georgia State University; Bill Diviney, ABN AMRO Bank NV; Gabriel Ehrlich, Daniil Manaenkov, Owen Nie, and Aditi Thapar, RSQE, University of Michigan; Michael R. Englund, Action Economics, LLC; J.D. Foster, U.S. Chamber of Commerce; Michael Gapen, Barclays Capital; Sacha Gelfer, Bentley University; James Glassman, JPMorgan Chase & Co.; Jan Hatzius, Goldman Sachs; Keith Hembre, Nuveen Asset Management; Peter Hooper, Deutsche Bank Securities, Inc.; Fred Joutz, Benchmark Forecasts; Sam Kahan, Kahan Consulting Ltd. (ACT Research LLC); N. Karp, BBVA Research USA; Walter Kemmsies, Jones Lang LaSalle; Jack Kleinhenz, Kleinhenz & Associates, Inc.; Thomas Lam, Sim Kee Boon Institute, Singapore Management University; L. Douglas Lee, Economics from Washington; John Lonski, Moody’s Capital Markets Group; Macroeconomic Advisers, IHS Markit; Robert McNab, Old Dominion University; R. Anthony Metz, Pareto Optimal Economics; R. M. Monaco, TitanRM; Michael Moran, Daiwa Capital Markets America; Joel L. Naroff, Naroff Economic Advisors; Mark Nielson, Ph.D., MacroEcon Global Advisors; Luca Noto, Anima Sgr; Brendon Ogmundson, BC Real Estate Association; Arun Raha and Maira Trimble, Eaton Corporation; Philip Rothman, East Carolina University; Chris Rupkey, MUFG Union Bank; Sean M. Snaith, Ph.D., University of Central Florida; Constantine G. Soras, Ph.D., CGS Economic Consulting/Montclair State University; Stephen Stanley, Amherst Pierpont Securities; Charles Steindel, Ramapo College of New Jersey; Susan M. Sterne, Economic Analysis Associates, Inc.; James Sweeney, Credit Suisse; Thomas Kevin Swift, American Chemistry Council; Mark Zandi, Moody’s Analytics; Ellen Zentner, Morgan Stanley.

This is a partial list of participants. We also thank those who wish to remain anonymous.

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First Quarter 2019 PDF

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The survey for 2019 Q2 will be released on May 10, 2019.

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Tom Stark
Federal Reserve Bank of Philadelphia
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Philadelphia, PA 19106
PHIL.SPF@phil.frb.org E-mail