GDP Forecasts in the July WSJ Survey of Economists
On July 27th we will get the Advance Estimate for Q2 GDP from the Bureau of Economic Analysis. Meanwhile, the Wall Street Journal's July survey of economists is now available. Let's see what their various crystal balls and tea leaves are telling them about the future (download the WSJ Excel File).
First, some context: The BEA's Third Estimate for Q1 GDP came in at 1.9 percent, unchanged from the second estimate, which was a downward revision from Preliminary Estimate of 2.2 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).
In a nutshell, the consensus of WSJ economists, who were surveyed during July 6-10), is for a decline in GDP from the Q1 1.9 percent. The Q2 forecasts ranged from 0.7 to 2.5 percent. The median (middle) and mode (most frequent) both came in at 1.8 percent. The mean (average) forecast was slightly lower at 1.7 percent.
The chart below illustrates the responses for all three remaining quarters of 2012.
What about the WSJ survey forecasts for annual GDP? The chart below illustrates their responses. Note that ten economists declined to make a 2014 forecast. What is particularly striking is the range of forecasts for each year -- a range that, not surprisingly, increases as the gaze is directed further into the future.
And now for the Fed's GDP expectations, which are annual forecasts only. The most recent the Federal Reserve economic projections date from June 20th, which are available here. But to save you the click, here is a snapshot of the GDP data.
Again, no surprises. The Fed's range of forecasts is narrower than the economists. My friend Lance Roberts has some interesting thoughts on the Fed's perspective in his essay last week: The Fed And Goldilocks Economic Forecasting.
Actually, the July 27th Advance Estimate for Q2 GDP could see a major game-changer for the sport of GDP forecasting. We get the annual revision wild card, which could bring adjustments to the past 13 quarters.
|The annual revision of the national income and product accounts (NIPAs), covering the first quarter of 2009 through the first quarter of 2012, will be released along with the "advance" estimate of GDP for the second quarter of 2012 on July 27, 2012.|
Last year's revisions produced some rather remarkable changes (more here). Could we also see surprises this July?
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 June offered a negative GDP forecast; however the average response to the probability question was 21%, a small increase from the 19% in last month's survey and 16% the month before that.