US inflation expectations rise in latest survey

(Bloomberg) – Economists are getting the idea of ​​higher inflation early next year.

The latest Bloomberg monthly survey shows that forecasters have raised their projections for several measures of inflationary pressures: the consumer price index, the price index of personal consumption expenditures, and the measure of personal consumption expenditures that excludes food and fuel, for each quarter until March 2022.

The CPI at the end of the second quarter of this year will likely show a 3.8% increase over the same period last year, while the price index for personal consumption expenditures will rise 3%, according to a survey of 71 economists between May 7 and 13.

The latest projections, well above where they were at the beginning of the year, show the adjustments forecasters are making in response to tight supply, logistical challenges, firmer demand, and trillions of dollars in support of fiscal and monetary policy. .

“The supply capacity of the US economy may not be able to keep up with the growth of demand, which is already evident in the shortage of supply, from semiconductors to labor,” said James Knightley, chief economist. ING International. “We suspect that inflation could remain higher for longer than the Federal Reserve predicts.”

For their part, Fed officials see the rebound in price pressures as temporary and have signaled their intention to maintain an ultra-expansionary policy even with inflation that exceeds its 2% target.

Forecasts for the underlying price index of the personal consumption expenditure index, favored by Fed officials, rose above 2% for each quarter through January-March next year.

Economists also raised their growth forecasts for the second quarter, anticipating that government aid, advancing vaccination campaigns and increased social activity will provide further impetus. The median estimate projects a 9.3% annualized increase in gross domestic product, down from 8.1% in the April survey.

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Original Note: US Inflation Expectations Mount in Latest Survey of Economists

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