Chicago "Fed" Symposium Predicts Strong Growth for 2010
January 18, 2010
The Federal Reserve Bank of Chicago last week released the findings of its 23rd annual Economic Outlook Symposium, in which its participants predicted solid economic growth in the U.S. for 2010, increased inflation, and a peak in the unemployment rate early in the year.
This year's symposium, held Dec. 4, 2009, included participation from more than 120 economists and analysts from business, academia and government. Their consensus forecast for 2010 calls for "solid" economic growth, with the economy expected to expand at 2.5 percent. The unemployment rate is expected to climb to 10.3 percent in the year's first quarter, and then edge lower during the year to reach 9.8 percent by the fourth quarter.
With improving economic growth, the consensus view from the symposium is that inflation, as measured by the Consumer Price Index, will rise from an estimated 1.2 percent in 2009 to 2.2 percent in 2010. Participants on average also predicted the price of oil to increase to about $83 per barrel by the end of 2010, light vehicle sales to increase to 11.4 units, business fixed investment to increase to 3.5 percent, and industrial production to rise 4.0 percent for the year.
Participants' consensus forecast for housing predicts "strong growth in 2010," with residential investment expected to increase 11.4 percent, the best performance since 2003. Housing starts are expected to rise sharply, increasing from 0.57 million in 2009 to 0.74 million in 2010, an increase of almost 30 percent.
The forecast for the ten-year Treasury rate sees an increase of 59 basis points (to 4.00 percent), and the one-year Treasury rate expected to rise by 75 basis points (to 1.20 percent). The trade-weighted U.S. Dollar is expected to edge lower in 2010, with a decrease of 1.8 percent, and the trade deficit to increase "somewhat."
