RL30329
Current Economic Conditions and Selected Forecasts
May 20, 2008
Download Locations
Summary
U.S. real GDP growth has been positive for 25consecutive quarters or 75 months making this the fifth longest expansion since such calculations were made beginning with data in 1857 (the longest expansion lasted 120 months). As of the first quarter of 2008, real GDP is about 20% larger than it was at its previous high near the end of the 1991-2001 expansion. During the first quarter of 2008, real GDP grew at an annual rate of 0.6%, similar to the fourth quarter 2007. Annualized rates of growth over the first through fourth quarters of 2007 were 0.6%, 3.8%, and 4.9%. While the present expansion has been characterized by a modest growth in payroll employment compared with past expansions, a rising unemployment rate and job losses have characterized the first quarter of 2008. The unemployment rate has risen to 5.0% (April) from an expansion low of 4.4% (October 2006) and payroll employment has declined by nearly 160,000. Inflation is also on the rise. The headline inflation rate, measured by the CPI, rose 3.9% for the 12 months ending in April 2008. This is higher than the core inflation rate (which excludes food and energy) of 2.3%. For the three months ending in March 2008, the headline CPI rose at an annual rate of 2.3%. Excluding food and energy, it rose at an annualized rate of 1.2%. The consensus among economists is that GDP will grow between 0.9% and 1.4% in 2008. The unemployment rate is expected to rise and average between 5.1% and 5.5%. The inflation rate is expected to be similar to the rate that prevailed in 2007. And, although the international trade deficit is still large, it has declined and the decline is expected to continue. To forestall an economic downturn and to ease the stress in national financial markets, the Federal Reserve has eased monetary policy over the past seven months. Between September 18, 2007, and April 30, 2008, the target for the federal funds rate was incrementally reduced to 2% from 5.25%. This report will be updated monthly.
