Economists in Bloomberg’s monthly survey now predict GDP growth of 3% for the first quarter, down from 3.9% last month.
Bloomberg’s monthly economic survey doesn’t carry a lot of good news.
Economists now predict GDP growth of 3% for the first quarter, down from 3.9% in the December survey, thanks to the spread of the omicron Covid variant.
The silver lining is that economists don’t see that damage lasting long. For 2022 as a whole, the median forecast calls for average growth of 3.8%. That’s down only from 3.9% the last survey.
“We expect the omicron hit to GDP to be short and sharp,” said Anna Wong, chief U.S. economist for Bloomberg.
“And the rebound should be just as swift. Conditional forecasts based on our daily GDP tracker suggest activity to trough in early February, and a rebound would be in full swing by the March FOMC meeting.”
Many economists and investors expect the Federal Reserve to begin raising interests at that meeting to quash inflation. Consumer prices soared 7% last year,
Economists in Bloomberg’s survey raised their inflation estimate for each quarter of this year, with their second-quarter forecast now at 5.2%, up from 4.8% last month.
That’s a lot better than 7%, but it’s still pretty high, given numbers of around 2%, the Fed’s target, prior to the pandemic last year.
Many experts now expect the Fed to raise rates four times this year. Goldman Sachs Chief Economist Jan Hatzius is one of them. “Declining labor market slack has made Fed officials more sensitive to upside inflation risks and less sensitive to downside growth risks,” he wrote Sunday.
Unemployment fell to 3.9% in December from 4.2% in November.
