Economists now expect a lot more inflation going into the end of the year than they did a few months ago, a survey from the National Association of Business Economists showed Monday.
Core consumer prices, which exclude food and energy costs, are expected to be up six percent from the fourth quarter of 2020, the NABE said. In the September survey, the increase was forecast at just 5.1 percent.
Seventy-one percent of economists survey think the Federal Reserve’s preferred measure of inflation, the core PCE price index, will not cool down to the Fed’s target of two percent until the second half of 2023 or later.
“Two-thirds of the panel expect wage increases will keep inflation elevated over the next three years,” said Survey Chair Yelena Shulyatyeva, senior U.S. Economist, Bloomberg.
The Department of Labor will report the November Consumer Price Index on Friday. Prices are expected to rise 6.7 percent compared with November 2020. Core CPI is forecast as jumping 4.9 percent.
Even while they view inflation as hotter, economists have been downgrading their projections for growth.
“For a second consecutive survey, NABE panelists have downgraded their forecasts for economic growth in 2021. The median forecast for the change in inflation-adjusted gross domestic product (real GDP) from the fourth quarter (Q4) 2020 to Q4 2021 is 4.9%. This forecast is down from the 5.6% year-over-year (y/y) rate forecasted in the September 2021 survey, and the 6.7% in the May survey. The median real GDP growth estimate for 2022 is 3.6% y/y, up slightly from the estimate in the September survey,” the NABE reported.