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The latest consensus forecast for the U.S. economy predicts slightly stronger growth through next year, but a weaker labor market with more job losses and higher unemployment rates, the Federal Reserve Bank of Philadelphia said Monday.

One of the 41 economic forecasters surveyed who tracks southern New Jersey said the region may do a little better than the nation, but gaming industry-dependent Atlantic City will take longer to recover.

The survey also found that economists see a lower chance of another downturn - a second dip to the recession - while they expect inflation to remain modest for the next decade.

In the Fed's quarterly Survey of Professional Forecasters across the nation, the consensus estimate for growth this quarter increased to 2.7 percent from 2.2 percent in the prior survey, with gross domestic product increasing at a slower rate until reaching nearly 3 percent by the end of 2010.

The forecasters expect the jobless rate to top out at 10.2 percent this quarter and next, and not fall below 10 percent until late 2010 and not below 9 percent until 2012.

Their previous prediction of payroll reductions of 81,000 workers per month in this quarter grew considerably gloomier: They now see an average of 159,500 job losses per month for October, November and December.

Job gains are not expected until the second quarter of 2010, but the forecast for new jobs in the following quarter was increased from 90,800 to 158,600.

Joel Naroff, president of Naroff Economic Advisors in Holland, Pa., tracks the regional economy and has a home in Margate. He said Monday that most of southern New Jersey may recover a bit more quickly because it did not suffer from the same level of excess construction and price runup as much of the nation.

"Because we didn't partake as much in the bubbly, we don't have as big a hangover that some areas have," Naroff said. "That will help us get through it."

Even shore locations where housing prices did soar should rebound sooner than elsewhere simply because it is the shore and remains a more desirable area, he said.

Atlantic City, however, will have to wait for the gaming industry to come back, which will take longer because consumers will remain cautious, especially about discretionary spending, he said.

The Fed-surveyed forecasters became more confident that a second contraction of the economy will not happen, reducing the chance of that from 24 percent to 15 percent or lower for the year ahead.

And the economists cut their expectations for inflation through 2018 from 2.5 percent to 2.26 percent, as measured by the Consumer Price Index. For the next two years or so, they predicted inflation will rise no higher than 2.1 percent.

Contact Kevin Post:

609-272-7250

KPost@pressofac.com

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