U.S. Core Inflation to Cool in Second Half, NABE Survey Shows

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Business economists are increasingly optimistic about the U.S. economy’s growth prospects in 2021 and most see core inflation pressures moderating by the end of the year.

A median estimate of economists calls for a 6.7% real growth rate in 2021, according to a survey from the National Association of Business Economists, up from the 4.8% forecast in the March survey.

Respondents see the personal consumption expenditures price index, minus food and energy, cooling to 2.1% in the fourth quarter from a projected 2.6% in the April-June period.

“Inflation expectations moved up significantly from those in the March survey, but panelists anticipate inflation easing in the second half of 2021, with no resurgence in 2022,” Holly Wade, the chair of the survey, said in a statement.

The consumer price index will rise to 2.8% in the final three months of the year, on a year-over-year basis, then drop to 2.4% in the fourth quarter of 2022, the survey showed.

The CPI climbed last month by the most since 2009, stoking an already heated debate about inflation. Federal Reserve officials have said price pressures from pent-up demand and supply chain bottlenecks will likely prove temporary, but many others expect the pickup in inflation to prove more lasting.

Some two-thirds of survey respondents anticipate U.S. employment to return to pre-pandemic levels by the end of this year or in 2022, which is sooner than what they estimated in prior surveys. The unemployment rate will likely average 5.6% this year and 4.3% next year, according to a median forecast of those surveyed.

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