The country’s business economists have sharply raised their forecasts for inflation, predicting an extension of price increases resulting in large amounts of disruption to supply chains.
WASHINGTON — The country’s business economists have sharply raised their forecasts for inflation, predicting an extension of price increases, resulting in massive disruptions to supply chains.
A survey released Monday by the National Association for Business Economics found its panel of forecasters expects consumer prices to rise 6% in the quarter compared to a year ago. This marks an increase from the 5.1% inflation predicted in September for the 12-month period.
Eighty-seven percent of the panelists identified supply chain constraints as a major factor driving the price uptick.
NABE Vice President Julie Coronado said that nearly three-quarters of the panel of 48 forecasters expect the Fed’s preferred inflation gauge, which reflects consumer spending patterns, to rise 4.9% this year — the central bank’s 2%. Target well above annual inflation
About 60% of NABE panelists expect the job market to reach full employment next year. Two-thirds of panelists said they think wage benefits will keep inflation high over the next three years.
On Friday, the government reported that the unemployment rate fell to 4.2% in November, from 4.6% in October. The NABE panel expects the unemployment rate to continue to fall to 3.8% by the end of 2022.
Last month, employers added just 210,000 jobs, the government estimated on Friday. It was the weakest monthly profit in nearly a year and was less than half of October’s 546,000 jobs gain. However, the NABE panel expects monthly gains in payroll jobs to average 337,000 next year, about 5% higher than its projection in the September survey.
The forecast panel expects the overall economy, as measured by GDP, to expand by 5.5% this year. It will mark a strong jump from a 3.4% drop in GDP last year, when the economy was derailed by a nationwide shutdown caused by the outbreak of the pandemic. Next year, NABE forecasters expect GDP to grow a still solid 3.9%.
In addressing the supply chains affecting the economy this year, the majority of NABE panelists (58%) say they think goods flows will begin to normalize in the first half of 2022. Twenty-two percent say they feel that the process has already started.