The Blue Chip survey of leading business forecasters predicts that the growth of real gross domestic product will average 3.5 percent over the next two years and that unemployment rates will decline slightly. Unemployment rates are near their normal, or equilibrium, level, yet these forecasters still look for basic stability in core inflation rates.
According to the Blue Chip survey, investment should grow at healthy rates, and productivity growth should remain strong. In these forecasts, the Federal Reserve is expected to keep raising short-term interest rates toward their equilibrium level. It all seems pretty healthy - what is there to worry about?