Whither 2012 GDP?
Comparing the WSJ Survey and Fed Projections
Earlier this week the Wall Street Journal posted the results of its May Survey of economists. Naturally I charted some of the data, focusing on GDP, but I held off on sharing it until we got the latest Federal Reserve GDP projections, published at 2 PM today. Here's a link to the Journal's forecast page and the actual data in the WSJ Excel File.
First, some context: The BEA's Advance Estimate for Q1 GDP came in at 2.2 percent, a decline from the 3.0 percent Final Estimate for Q4 2011. 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).
As we might expect, the May WSJ survey consensus, both the median (middle), mean (average) and mode (the most frequent forecast) was -- no surprise here -- spot on the BEA's estimate of 2.2 percent.
What about Q2 2012 GDP? The median stuck at 2.2 percent, but interestingly enough, only two of the 49 respondents stuck to the median. And only 3 respondents hit the mean, 0.1 percent higher at 2.3. The mode for Q2 GDP 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? Today's Federal Reserve economic projections are available as a PDF file here. The latest Fed range of estimates for 2012 GDP is 2.1 to 3.0, with a "central tendency" of 2.4 to 2.9. The range is unchanged from the January projections, but the "central tendency" is an upward revision from January's projections of 2.2 to 2.7.
Now let's have a look at what the WSJ economists think about the 2012 annual number.
So, with a 2.5 percent mean (two respondents), a 2.3 percent median (6 respondents) and a mode of 2.0 percent (7 respondents), the economists are distinctly less optimistic in that their estimates gravitate toward in the lower end of the Fed's range. Particularly striking is the fact that the most frequent estimate is also the lowest estimate.
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 offered a negative GDP forecast; however, the average response to the probability question was 16%, unchanged from January.