FINANCIAL PROFESSIONALS: 888.775.8351
SHAREHOLDER SERVICES: 888.453.4003
Following another month of weaker-than-expected data, we have revised down our forecast of growth in both 2011 and 2012. As a result, we have pushed back to mid-2012 the expected start of Fed tightening.
GDP growth is expected to rebound in the second half to a comfortably above-trend pace, but one slightly slower than in last month's forecast, despite factors that would otherwise lead us to expect stronger growth.
Our forecast of core Personal Consumption Expenditures (PCE) inflation in 2011 has been revised up 1/2 percentage point over the past four months. The question is why?
We now expect the Fed to begin tightening rates in mid-2012 rather than January 2012, as a result of the further weakening of the growth outlook and higher unemployment path.