US Inflation Forecasts Marked Higher for 2023, Survey Shows

(Bloomberg) — Economists boosted their inflation estimates for each quarter in 2023, a potentially worrying sign for Federal Reserve policymakers trying to keep price expectations anchored.

The personal consumption expenditures index, which the Fed uses for its inflation target, is seen averaging an annualized 2.5% at the end of next year, up from 2.3% in July, the latest Bloomberg monthly survey showed.

Perhaps a more troubling sign of the broad-based nature of inflationary pressures, economists project the year-over-year core PCE price gauge, which strips out volatile food and energy costs, to average 2.9% in the fourth quarter of next year, up from last month’s 2.6%.

The higher inflation projections could be a concerning development for the Fed, which has already stepped up the magnitude of its interest-rate hikes to curb price pressures. Should the forecasts come to fruition, that might mean the central bank will have to do even more to achieve its 2% inflation goal.

The Fed also closely monitors inflation expectations since they risk becoming a self-fulfilling prophecy. Consumers expecting higher prices may spend more now, keeping demand elevated and further testing the productive capacity of the economy. Businesses, which are already experiencing higher labor costs, may respond by raising prices further.

The 56 economists, who were surveyed from Aug. 5-10, also see the consumer price index clocking in higher throughout next year than they did a month ago. Most of their responses were recorded before the July CPI released on Wednesday and the producer price index on Thursday, both of which moderated on the heels of cheaper energy prices.

Meantime, the probability of a recession over the next 12 months now stands at 49%, up from 47.5% in the July survey, according to 35 of the economists who responded.

Gross domestic product is seen rising an average 1.1% next year, slower than the 1.3% projected last month. GDP growth isn’t expected to top 1.4% in any quarter in 2023.

 

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

Follow us on social media for the latest updates in B2B!

Latest

verizon leaders
Verizon Leaders: Unlocking Connectivity with the Verizon Partner Network
December 1, 2023

For a special episode of The Verizon Partner Network the focus was on the considerable role of partnerships in the Verizon Partner Program and the leaders shared their perspectives on the initiative. Their conversation brought about a lot of thought-providing context on the evolving telecommunications landscape. In today’s era, collaboration and integration are key to […]

Read More
2024
Mark Tina Envisions Differences to the Verizon Partner Network in 2024
December 1, 2023

In the dynamic telecommunications landscape, Verizon’s Partner Network continues to evolve, adapting to new trends and opportunities. For another segment featuring Mark Tina, VP of Indirect Channel Distribution and Channel Chief at Verizon Business Group, he explores exactly what types of significant changes and advancements the Verizon Partner Network will see in 2024. In this […]

Read More
verizon business group
Mark Tina Explores the Importance of Partners in Verizon Business Group Success
December 1, 2023

A special episode of The Verizon Partner Network focuses on an examination of an industry marked by fierce competition and rapid innovation. But most importantly, how the role of partnerships in a company’s success is increasingly vital. Mark Tina, the VP of Indirect Channel Distribution and Channel Chief at Verizon, details why partners are essential […]

Read More