NEW YORK (AP) — Pessimism may be the mood on Wall Street, but a survey of top economists by the Federal Reserve Bank of Philadelphia found the forecasters predicting the U.S. will escape a recession.
The bank's venerable quarterly Survey of Professional Forecasters reckons that the U.S. gross domestic product will rise by 0.7 percent in the first quarter, and by 1.3 percent in the second. On an annual average over annual average basis, U.S. GDP is seen rising by 1.8 percent in 2008 and by 2.8 percent the following year.
''The forecasters are not predicting a contraction,'' the report said, adding that survey respondents see a slightly less than even chance of a contraction in both the first and second quarters of the year.
Many forecasters disagree with the findings of the Philadelphia Fed survey. Indeed, major investment banks such as Goldman Sachs and UBS think a contraction is already happening. The negative sentiments shared by much of the broader public: a recent Associated Press-Ipsos poll found that nearly two-thirds of respondents believe an economic contraction is happening right now.
While the economists in the survey don't see an outright downturn, the report noted estimates of growth are sharply lowered from the fourth quarter 2007 survey, when first quarter growth was seen up by 2.2 percent, and second quarter growth was seen rising 2.3 percent.
On the inflation front, the report found that respondents believe that on a fourth quarter to fourth quarter basis, the consumer price index stripped of food and energy factors will rise by ''roughly'' 2.2 percent over the next three years. As measured by the Federal Reserve's preferred gauge, the core personal consumption expenditures price index, inflation is seen rising by 2.0 percent over 2008 and 2009. That's up from the 1.9 percent estimate in the prior quarter's survey.
The Survey of Professional Forecasters is based on the responses of 50 economists, and has been in existence since 1968. The Philadelphia Fed conducts the poll in cooperation with the National Bureau for Economic Research.
Michael S. Derby is a correspondent of Dow Jones Newswires.