Fourth Quarter 2025 Survey of Professional Forecasters

Forecasters Predict Slightly Higher Growth in 2025 and 2026

The outlook for growth in the U.S. economy looks marginally better now than it did three months ago, according to 33 forecasters surveyed by the Federal Reserve Bank of Philadelphia. On an annual-average over annual-average basis, the forecasters expect real GDP to grow at an annual rate of 1.9 percent in 2025 and 1.8 percent in 2026. These annual projections are 0.2 percentage point higher than the estimates in the survey of three months ago. The growth projections for 2027 and 2028 of 2.1 percent and 1.8 percent, respectively, remain unchanged compared with those in the survey of three months ago.

The projections for the unemployment rate are nearly unchanged from those of the previous survey. Like the previous survey, the unemployment rate is projected to be an annual average of 4.2 percent in 2025 and 4.5 percent in 2026 before falling to 4.4 percent in 2027, and 4.3 percent in 2028.

On the employment front, the forecasters predict job gains in the current quarter at a rate of 30,800 per month. The employment projections for both the current quarter and the following three quarters show downward revisions from those in the survey of three months ago. The projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 125,100 in 2025 and 55,200 in 2026, down from the previous estimates of 132,800 in 2025 and 86,200 in 2026. (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.)

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 presents the forecasters’ previous and current estimates of the probability that growth will fall into each of 11 ranges. For each of the four years, from 2025 to 2028, the forecasters have increased their estimates of the probability that real GDP growth will be in the range of 1.5 percent to 2.4 percent.

• Mean Probabilities for Real GDP Growth in 2025 (chart)
• Mean Probabilities for Real GDP Growth in 2026 (chart)
• Mean Probabilities for Real GDP Growth in 2027 (chart)
• Mean Probabilities for Real GDP Growth in 2028 (chart)

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’ current and previous estimates of the probability that unemployment will fall into each of 10 ranges. For each of the four years, the forecasters are raising their probability estimates from those in the previous survey that the annual-average unemployment rate will be in the range of 4.3 percent to 4.8 percent.

• Mean Probabilities for Unemployment Rate in 2025 (chart)
• Mean Probabilities for Unemployment Rate in 2026 (chart)
• Mean Probabilities for Unemployment Rate in 2027 (chart)
• Mean Probabilities for Unemployment Rate in 2028 (chart)

Forecasters Expect Higher Inflation in 2026 and 2027

The forecasters see little change in the current-quarter headline and core measures of CPI and PCE inflation. They predict current-quarter headline CPI inflation will average 3.1 percent at an annual rate, up slightly from the previous prediction of 3.0 percent. Headline PCE inflation over the current quarter will be at an annual rate of 2.9 percent, down from the previous estimate of 3.0 percent.

Projections for all measures of CPI and PCE inflation in 2026 and 2027 have been revised upward compared with those in the survey of three months ago.

Over the next 10 years, 2025 to 2034, the forecasters predict headline CPI inflation will be an annual-average rate of 2.38 percent, higher than the estimate of 2.31 percent in the previous survey. The corresponding estimate for 10-year annual-average PCE inflation is 2.20 percent, unchanged from the previous estimate.

The charts below show the median projections (the red line) and the associated interquartile ranges (gray areas around the red line) for 10-year annual-average CPI and PCE inflation. The charts provide historical perspective on the current survey’s higher projection for long-term CPI inflation and the unchanged projection for long-term PCE inflation.

• Projections for the 10-Year Annual-Average Rate of CPI Inflation (chart)
• Projections for the 10-Year Annual-Average Rate of PCE Inflation (chart)

The figures below show the probabilities that the forecasters are assigning to each of 10 possible ranges for fourth-quarter over fourth-quarter core PCE inflation in 2025 and 2026. For both years, the forecasters have raised their estimates for the probability that core PCE inflation will be between 2.5 percent to 3.4 percent compared with their predictions in the last survey.

• Mean Probabilities for Core PCE Inflation in 2025 (chart)
• Mean Probabilities for Core PCE Inflation in 2026 (chart)

Lower Risk of a Contraction in Real GDP in the Next Two Quarters

The forecasters have revised downward the chance of a contraction in real GDP for the current quarter and the first quarter of 2026. For the current quarter, the forecasters predict a 22.9 percent chance of negative growth, down from 29.6 percent in the survey of three months ago. The forecasters also see a lower risk of a downturn in real GDP in the first quarter of 2026, compared with their previous estimates.

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.

No Historical Data for 2025 Q3

Due to the lack of data from federal statistical agencies, the historical data point for the third quarter of 2025 was unavailable for most variables when we conducted the survey. The forecasters provided a projection for this data point. The only exceptions are for the interest rates and the CPI inflation rates. The survey reports the actual historical values for these variables.

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

William Adams, Comerica Bank; Ed Al-Hussainy and Alexander Spitz, Columbia Threadneedle Investments; Scott Anderson and Doug Porter, BMO Capital Markets; Robert J. Barbera, Johns Hopkins University Center for Financial Economics; Peter Bernstein, RCF Economic and Financial Consulting, Inc.; Wayne Best and Michael Brown, Visa, Inc.; Seth Carpenter, Morgan Stanley; Christine Chmura, Ph.D., and Xiaobing Shuai, Ph.D., Chmura Economics & Analytics; Gary Ciminero, CFA, GLC Financial Economics; Grant Collins, AIM Research, LLC; Andrew Davis, Bryn Mawr Trust; Rajeev Dhawan, Georgia State University; Bill Diviney, ABN AMRO Bank NV; James Egelhof, BNP Paribas; Gabriel Ehrlich, Daniil Manaenkov, and Yinuo Zhang, RSQE, University of Michigan; Michael R. Englund, Action Economics, LLC; Michael Feroli, J.P. Morgan; Tani Fukui and Shan Ahmed, MetLife Investment Management; Sacha Gelfer, Bentley University; James Glassman, Independent Economist; Jan Hatzius, Goldman Sachs; Ben Herzon and Patrick Newport, S&P Global Market Intelligence; Steve Kihm, Citizens Utility Board of Wisconsin; Yaniv Konchitchki, University of California, Berkeley; Thomas Lam, Independent Economist (Singapore); Matthew Luzzetti, Deutsche Bank; Brian Martin, Australia New Zealand Bank (ANZ); Robert McNab, Old Dominion University; R. Anthony Metz, Pareto Optimal Economics, LLC; R. M. Monaco, TitanRM; Joel L. Naroff, Naroff Economics, LLC; Brendon Ogmundson, BC Real Estate Association; Panos N. Patatoukas, U.C. Berkeley, Haas School of Business; Perc Pineda, Ph.D., Plastics Industry Association; Jason Prole, Capital Risk Management; Tim Quinlan, Wells Fargo; Luciano Rispoli, Advance Macro Research; Michael Roberts and Dan Roberts, Roberts Capital Advisors, LLC; Parker Ross, Arch Capital Group; Philip Rothman, East Carolina University; Allen Sinai, Decision Economics, Inc.; Sean Snaith, University of Central Florida; Daniel Soques, University of North Carolina Wilmington; Stephen Stanley, Santander US Capital Markets; Charles Steindel, Editor, NABE Business Economics; Susan M. Sterne, Economic Analysis Associates, Inc.; Ryan Sweet, Oxford Economics USA, Inc.; Jordan Vickers and Maira Trimble, Eaton Corporation; Gary Wagner, University of Louisiana at Lafayette; Lawrence Werther, Daiwa Capital Markets America; Mark Zandi, Moody’s Analytics.

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

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