Bloomberg News reports that Chair of Federal Reserve Jerome Powell and his co-workers expect a steep drop off. This economic activity, the authority body anticipates, will prevail for the remaining part of 2023. At least, this is the indication as per the latest economic forecasts published in the current week.
What Else are the Policymakers Apprehending?
The numbers also indicate that the policymakers are anticipating the United States to eke out an expansion of 0.4% in the current year. This is down from a growth rate of 0.5%. They made a note of this figure in December’s forecast.
Robin Brooks Says…
The drop may not be considered if seen at the beginning. However, it is crucial to consider that number in light of the economic strength shown in the first quarter. Robin Brook, who is associated with the International Institute of Finance in Washington, revealed this.
Unanimous Thought Process of Chair of Federal Reserve and Fed Officials on Risks
Bloomberg News reports that in January, the GDPNow of Atlanta Fed predicted that the first quarter gross domestic product would surge by 0.7% annually. The estimate had surged to 3.2% by March 16th.
Fed policymakers usually do not divulge official forecasts for quarterly growth. However, by taking the cue of the estimates offered by the private forecasters and Fed economists, the new projections may signal that the Fed officials might see a sharper downward trajectory for quarters 2 through 4.
What Does the GDP Imply?
Based on the forecasts of the present first quarter, the latest projections of the Fed indicate that GDP is likely to shrink by 0.2% on average per quarter for the remaining part of the year. The former top economist of the White House, Jason Furman revealed this on the microblogging website. This is in comparison to the 0.5% average growth over three quarters hinted at by the December forecast of the Fed.
Bloomberg News reports that to increase the woes, almost all the officials of the Fed see risks to the forecast that is already downgraded and tilted to the plunge.
