Wall Street Echoes Fed’s View on Growth, Higher-for-Longer Rates

Wall Street economists are growing more upbeat about US economic growth while acknowledging that it may require interest rates to stay higher for longer, in line with recent projections by the Federal Reserve.

Gross domestic product is expected to advance at an annualized 3% rate in the third quarter, reflecting stronger consumer spending and private investment, according to the latest Bloomberg monthly survey of economists. That compares to the 1.8% pace projected in August and is six times the growth rate forecast at the start of the quarter.

stronger us economy near term

At the same time, a surge in oil prices in the past month will make the path to tame inflation even choppier. Respondents see the personal consumption expenditures price index — the Fed’s preferred inflation gauge — running at a faster pace in each quarter through the end of next year, compared to last month’s survey.

However, their projections for the core measure that strips out food and energy prices were largely unchanged.

The survey results follow updated economic projections from the Fed, which showed last week that officials also see stronger near-term growth. But policymakers and economists don’t see the momentum lasting as high borrowing costs, an impending government shutdown and the resumption of student-loan payments muddy the outlook.