(Bloomberg) -- The US economy is now expected to narrowly dodge a recession this year but underlying inflation will be faster than previously thought, according to the latest Bloomberg monthly survey of economists.

Gross domestic product is now forecast to only contract in the final three months of the year, and it’s projected to merely stagnate in the third quarter instead of shrink, the June survey showed. 

While estimates were marked up for the current quarter and next — due to stronger consumer spending and upward revisions to business investment — GDP growth is seen slightly weaker through the end of 2024.

At the same time, economists see the personal consumption expenditures price index, excluding food and energy, rising at a faster pace over the next year than they did in the May survey. That corroborates the Federal Reserve’s view as well, supporting policymakers’ assertion that another two interest-rate hikes will probably be appropriate this year.

According to the median forecast, economists see one more rate hike in the third quarter, with the federal funds rate holding in a 5.25%-5.5% range through yearend before an expected quarter-point cut in early 2024.

The survey of 71 economists from June 16-21 showed stronger views of the labor market. Forecasters mostly see increased hiring this year and next, and they also expect the unemployment rate will peak at a slightly lower level. That helps explain projections for sustained consumer spending.

The findings also support the notion that the housing market bottom has passed. While sales of previously owned homes are struggling for momentum, buyers are seeking new construction and builders have been responding to demand. Economists see that trend continuing with higher new-home sales over the next year and more housing starts.

©2023 Bloomberg L.P.