America’s business economists have drastically increased their inflation forecasts as they predict an extension of the price hikes which have resulted from the bottlenecked supply chains, a report said.
The National Association for Business Economics (NABE) report released on Monday revealed that their panel of forecasters anticipates consumer prices to increase by six percent this quarter compared to a year ago. It’s a significant increase from the 5.1 percent inflation forecasters predicted in September for the same 12-month time frame.
Eighty-seven percent of panelists have identified bottlenecks in the supply chain as a significant factor in price increases.
Julie Coronado, vice president of the NABE, said that almost three-fourths of the 48-person panel anticipates the preferred inflation gauge of the Fed that measures spending patterns to grow by 4.9 percent this year. This is higher than the central bank’s two percent inflation goal.
About 60 percent of the NABE panelists believe that the market for jobs will reach full employment in the next 12 months. Two-thirds of them said they believe wage increases will continue to push inflation higher in the coming three years.
Last Friday, government officials announced that the unemployment rate fell to 4.2 percent in November, down from 4.6 percent in October. The NABE panel is expecting the unemployment rate to keep decreasing to 3.8 percent at the end of 2022.
In November, employers added only 210,000 jobs. It was the smallest month-to-month growth in almost an entire year and was less than half the gain in October’s 546,000 new jobs. The NABE panel is expecting monthly increases in employment in the payroll sector to be 337,000 by the end of next year, an increase of approximately five percent over its forecast in the September survey.
The forecasting panel is expecting the economy to grow by 5.5 percent this year. This would be a significant return from the 3.4 percent drop in GDP the previous year in which the economy was slowed through nationwide shut-downs triggered by the emergence of the pandemic. Next year, NABE forecasters anticipate that GDP will increase by 3.9 percent.
In response to the supply chain snarl that hurt the USA’s economy in the past year, most NABE panelists (58 percent) believe that flow of merchandise will start to improve within the first half of 2022. Twenty-two percent of them believe that the process has already begun.