The average of the 33 private forecasts put growth in the first two quarters of 1999 at an annual 2.85% pace, well above the 1.7% they predicted just three months ago. The economy expanded at a 3.9% rate in 1998.

Despite the economy's stronger-than-expected growth, the forecasters are more optimistic about inflation than they were in previous surveys. They expect consumer prices to rise only 2% in 1999, marking down their forecasts to reflect changes in the government's consumer price index. Over the next decade, the forecasters expect the CPI to climb 2.3% a year.

With continued growth and little uptick in inflation, the forecasters expect the stock market to keep climbing over the next decade, but they foresee returns closer to the historical norm. On average, they expect the total return on the Standard & Poor's 500 index to be 8% a year after inflation, down from the 9% they forecast last year. The inflation-adjusted return on the S&P 500 last year exceeded 20%. The Philadelphia Fed doesn't probe for the forecasters' short-term outlook for the stock market.

Over the next decade, the forecasters are predicting that the U.S. economy will expand at about 2.5% a year, after adjusting for inflation, and that productivity, or output per hour of work, will climb 1.55%, up slightly from 1.5% in last quarter's survey.

The survey found little hint that the forecasters expect substantial harm to the U.S. economy from the year-2000 bug -- the inability of some computers to cope with the change from 1999 to 2000. Several forecasters see a chance that businesses will build inventories in late 1999 just in case, and then liquidate those inventories in the first part of 2000. This raises the odds of a decline in gross domestic product in the first quarter of 2000.

The average of the forecasts, however, is for growth at an annual rate of 2.4% in the first quarter of 2000 and 2.3% for the entire year. As a group, the forecasters put the odds of a decline in GDP in the first quarter of 2000 at one in four, although some say the odds are as high as one in two.

The forecasters anticipate little change in the unemployment rate over the next year. But they expect -- as they have for months -- a decline in housing starts from last year's 1.62 million starts to 1.59 million starts this year and 1.50 million in 2000.

With little inflation in sight, the forecasters see little change in short-term interest rates. They expect the yield on three-month Treasury bills to hold steady at 4.4% over the next five quarters. Longer-term interest rates are expected to rise slightly; the yield on 10-year Treasury bonds is expected to climb from 4.8% in the current quarter to 5.1% in the first quarter of 200.