Economists Cut 4Q U.S. Economic Forecasts

Economists trimmed their forecasts for U.S. economic growth in the final quarter of the year and the first three months of 2014 but predicted a slightly higher rate of job growth over the next four quarters.

Analysts see the economy growing at an annual rate of 1.8 percent in the current quarter, down from a previous estimate of 2.3 percent, according to the Philadelphia Federal Reserve's quarterly survey of 42 forecasters.

Growth in the first quarter of 2014 was seen picking up to 2.5 percent, though that, too, was down from a prior estimate of 2.7 percent.

The economy is expected to grow at a rate of 1.7 percent for all of 2013 and 2.6 percent in 2014.

The pace of hiring was expected to increase slightly over the next year, with an average rate of monthly job growth seen around 187,000 for each of the next two quarters before rising to 202,100 by the final quarter of 2014.

The jobless rate was expected to be 7.2 percent at the end of the current quarter and 7 percent by the second quarter of 2014.

The most recent official unemployment rate released by the government edged up to 7.3 percent in October from 7.2 percent.

The Fed has promised to hold interest rates near zero until unemployment hits 6.5 percent, provided the outlook for inflation stays under 2.5 percent.

Inflation was expected to remain muted, with year-on-year headline consumer price inflation averaging 1.4 percent in the fourth quarter of 2013 and 2 percent in the fourth quarter of 2014. Those numbers were unchanged from prior estimates.

The year-on-year core reading of CPI, which removes food and energy, was also steady at 1.8 percent in 2013 and 2 percent in 2014.

On a quarter-on-quarter basis, core CPI was forecast at 1.7 percent in the fourth quarter and 1.9 percent in the first three months of next year. Both were revised down slightly from the previous forecast. (Reporting by Steven C. Johnson; Editing by Chizu Nomiyama)

Source: Fox Business