US Economic and Interest Rate Outlook, January 2011
Economic Outlook:
- We are presenting the outlook this month in a PowerPoint format.
- The forecasts of key economic variables and interest rates are in the usual tables following the respective slides with highlights of the forecast.
- There are some significant changes to key variables in this month's forecast compared with the November 2010 forecast (the last forecast update).
- With regard to 2010 real GDP growth, we expect Q4/Q4 growth of 2.9% vs. 2.3% in the November forecast. Based on Q4:2010 available data, real GDP appears to be coming in at an annual rate of 3.6% rather than the 1.9% we were projecting in November. In addition, the Commerce Department revised up Q3:2010 real GDP growth from 2.0% to 2.6%.
- With regard to 2011 real GDP growth, we now expect Q4/Q4 growth of 3.3% vs. 3.0% in the November forecast. An upward revision of 2011 Q4/Q4 real consumption growth to 2.9% from 2.5% in November is the primary factor accounting for the upward revision to the real GDP growth forecast. We are more optimistic about 2011 real GDP growth primarily because QE2 implies that the Fed will be purchasing all the additional Treasury debt issued in conjunction with the Obama-McConnell tax and unemployment insurance compromise. We currently see more upside risk to our 2011 real GDP growth forecast than downside risk.
- Consistent with the upward revision to our 2011 real GDP growth forecast, we also have lowered our forecast for the level of the unemployment rate and raised our forecast for the CPI inflation rate.
For more of this report, The 2011 Economic Outlook (PDF), click the editorial title link.
