## WSJ Economists' GDP Forecasts: 2.2% in Q1, Rising to 2.4% in Q2

### April 18th, 2012

### by Doug Short

On Friday of next week (April 27th) we'll get the Advance Estimate for Q1 GDP from the Bureau of Economic Analysis. Meanwhile, the Wall Street Journal's April Survey of economists is now available. Let's see what their crystal ball is telling them about Q1 GDP (download the WSJ Excel File).

First, some context: The BEA's Final Estimate for Q4 GDP came in at 3.0 percent, unchanged from the 3.0 percent Second Estimate, which was an upward revision from the Preliminary Estimate of 2.8 percent. The average GDP since the inception of quarterly GDP reporting in the late 1940s is 3.3 percent, which is nearly double the 1.7 percent 10-year moving average of GDP through the end of 2011 (illustrated here).

The April WSJ survey consensus, both the median (middle) and mean (average), is for a Q1 GDP of 2.2 percent. The mode (the most frequent forecast) was a slightly less optimistic 2.0 percent.

What about Q2 2012 GDP? The median and mean are slightly higher at 2.3 and 2.4, respectively. But the mode is unchanged at 2.0 percent.

Thus far we've looked at the forecasts for quarterly GDP. What about the WSJ survey forecast for 2012 annual GDP? The most recent the Federal Reserve economic projections date from January 24-25, which are available here. The Fed's range of estimates for 2012 at that time was 2.1 to 3.0, with a "central tendency" of 2.2 to 2.7. This represents a downward revision from the November 2011 range of 2.3 to 3.5, with a "central tendency" of 2.5 to 2.9.

Now let's have a look at what the WSJ economists think about the 2012 annual number.

So, with a 2.5 percent mean, a 2.3 percent median and two modes (2.2 and 2.3 percent), the economists are a bit less optimistic in that their estimates gravitate toward in the lower end of the Fed's range. But of course there's often an outlier — in this survey the 4.3 pie-in-the-sky from the Chief Economist for a company founded in Asheville, NC (which happens to be where I'm typing this commentary while visiting friends in the area).

**Odds of a Recession**

The WSJ survey questionnaire again this month included a question about the probability, on a scale of 1 to 100, of a US recession in the next 12 months. None of the economists in January offered a negative GDP forecast; however the average response to the probability question was 16%, a small drop from January's 19%.