Courtesy of Doug Short.
One of the big economic numbers this month will be the Q3 Advance Estimate for GDP, due out on Thursday. For some the 2014 GDP context, the Q1 third estimate was negative at -2.1% followed by a strong rebound to 4.6% in the Q2 third estimate. The standard explanation for the Q1 contraction is the economic impact of an unseasonably cold winter.
What do economists see in their collective crystal ball for Q3? Let’s take a look at the GDP forecasts from the latest Wall street Journal survey of economists conducted earlier this month.
Here’s a snapshot of the full array of WSJ opinions about Q3 GDP. I’ve highlighted the values for the median, mean (average) and mode (most frequent), which in the latest forecast were identical at 3.2% — a forecast shared by 22% of the 46 survey respondents.
As the visualization above reflects, despite the sizeable agreement on the median and mean, the latest WSJ survey had it outliers, ranging from a grimly pessimistic 1.0% to a pair of optimists at 4.5%.
Investing.com has a forecast of 3.0%. The Briefing.com consensus is also for 3.0%, but its own estimate is for a lower 2.3%.
Flash forward to Q4, and the consensus is even greater, although for a slightly lower print. About 30% (14 of the 46 respondents) see the median and mean Q4 GDP at 3.0%. The spread between the low and high estimates is a bit smaller with our pessimist’s quarterly estimate doubling from 1.0% to 2.0%.
Annual GDP for 2014
What about the annual GDP outlook? Here’s what our WSJ economists think along with summary of the Fed’s GDP project for 2014 from their most recent update on (September 17th). By the way, that 1.9% to 2.4% Fed range has a “central tendency” (Fed speak for excluding the three highest and three lowest projections) at 2.1% to 2.3%, which precisely straddles the WSJ’s 2.2% median and mean.
For a broad historical context for the latest forecasts, here a snapshot of GDP since Uncle Sam began tracking the data quarterly in 1947. The Q3 WSJ median and mean forecasts are above the 1.6% 10-year moving average and just a tad below the 3.3% Quarterly GDP average since its inception in 1947.
I’ll close with one more look at GDP — the year-over-year percent change, which offers a somewhat disturbing perspective on where we are in the grand scheme of things, with a clearly evident downward trend.
On Thursday we’ll find out how the Q3 forecasts stack up against the Advance Estimate of the real thing.
