Economists see the unemployment rate falling much faster than previously expected this year, even though they slightly lowered their outlook for economic growth, a survey released on Friday showed.
The Philadelphia Federal Reserve's first-quarter survey of 45 forecasters showed gross domestic product was expected to grow at an average annual rate of 2.3 percent in 2012, down from a 2.4 percent estimate in the fourth-quarter survey.
But for the labor market, a sharp drop in the unemployment rate in recent months apparently boosted optimism for the rest of this year.
The unemployment rate is now seen averaging 8.1 percent during the fourth quarter, which is when President Barack Obama will stand for re-election in November 6 polls.
The jobless rate was 8.3 percent in January, down from 8.7 percent in November when the fourth-quarter poll of forecasts was released.
In that poll, forecasters saw unemployment averaging 8.7 percent in the last three months of 2012.
Forecasts for GDP growth in 2013 were unchanged in the first-quarter poll at 2.7 percent.
For the current quarter, economists lowered their growth outlook to 2.2 percent from 2.4 percent.
Economists raised their expectations for inflation this year, seeing the Consumer Price Index up 2.1 percent in the fourth quarter from a year earlier. Previously, they expected that reading would be 2.0 percent.
(Reporting by Jason Lange; Editing by Padraic Cassidy)