WASHINGTON -- The nation's business economists have sharply raised their forecasts for inflation, predicting an extension of the price spikes that have resulted in large part from bottlenecked supply chains.
A survey released Monday by the National Association for Business Economics found that its panel of forecasters expects consumer prices to rise 6% this quarter compared with a year ago. That marks an increase from the 5.1% inflation the forecasters predicted in September for the same 12-month period.
Eighty-seven percent of the panelists have identified supply chain bottlenecks as a major factor in the acceleration of prices.
Julie Coronado, vice president of the NABE, said that nearly three-fourths of the panel of 48 forecasters expects the Fed's preferred inflation gauge, which reflects consumer spending patterns, to increase 4.9% this year — far above the central bank's 2% annual inflation target.
Nearly 60% of the NABE panelists expect the job market to reach full employment over the next year. Two-thirds of the panelists said they think wage gains will keep inflation elevated over the next three years.
On Friday, the government reported that the unemployment rate tumbled to 4.2% in November from 4.6% in October. The NABE panel expects the unemployment rate to keep declining to 3.8% by the end of 2022.
Last month, employers added just 210,000 jobs, the government estimated Friday. That was the weakest monthly gain in nearly a year and less than half of October's gain of 546,000 jobs. The NABE panel, though, expects monthly gains in payroll jobs to average 337,000 next year, up about 5% from its projection in the September survey.
The forecasting panel expects the overall economy, as measured by the gross domestic product, to expand by 5.5% this year. That would mark a robust bounce-back from the 3.4% drop in GDP last year, when the economy was derailed by nationwide shutdowns caused by the eruption of the pandemic. Next year, the NABE forecasters expect GDP to grow by a still-solid 3.9%.
Addressing the snarled supply chains that have hobbled the economy this year, a majority of NABE panelists (58%) say they think the flow of goods will begin to normalize in the first half of 2022. Twenty-two percent say they think that process has already begun.