(CEP News) - Forecasters are scaling back expectations of U.S. growth and inflation in the first half of 2009, as an ongoingly 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% in Q1 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 expectations of a 1.8% decline in Q2 GDP versus a previous expectation of a 0.8% gain, while Core PCE is expected to average 0.7% in Q1, down from a previous forecast of 1.6%.

The survey also suggests expectations for an 8.4% unemployment rate in the United States in Q2 and says forecasters expect the fiscal stimulus package to add 0.9% to GDP in 2009.

By Erik Kevin Franco, efranco@economicnews.ca

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Posted in Categories: Economy, Eurozone, Releases, USA.

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