Tomorrow will be the first of two big days for economic news. That's the day we get the Advance Estimate of Q3 GDP -- a rear-view metric, to be sure, and one that will be subject to revision for the following two months, not to mention annual revisions and the periodic comprehensive revisions (the last of which tweaked GDP data back to 1929). And on Friday we get the blockbuster October Employment Report, which presumably is a more critical data set for Fed policy.
Meanwhile the latest GDP forecasts from Wall Street Journal's monthly survey of economists are available. The latest survey was conducted October 4-8. That was during the government shutdown and debt-ceiling brawl, which may have impacted estimates for Q4 but not Q3.
As a reminder, Q2 Real GDP had an Advance Estimate of 1.7% which was revised upward to 2.5% in the Second Estimate and was unchanged (to one decimal place) in the Third Estimate.
Here's a snapshot of the full array of opinions in the latest survey.
The forecast range is 1.7 percent is skewed a bit by the optimistic outlier. The median (middle) is at 1.9 percent, with the mode (most common) and mean (average) forecasts at 2.0 percent (rounding the mean to one decimal place). Investing.com is in solid agreement with the WSJ economists. It has a forecast at 2.0 percent.
Looking Ahead to Q4
What do the economists see for Q4 of 2013? Not surprisingly, the forecast spread widens considerably as economists look further into the future, ranging from 0.5% to 4.0%. The median and mean came in aligned at 2.3 percent, but the range of opinions is further underscored by the two modes (seven each) straddling the smaller headcount at the median (three economists). The pessimistic outlier was no doubt expecting a major hit to the economy from the shutdown and debt-ceiling stalemate.
For a broad historical context for the latest forecasts, here a snapshot of GDP since Uncle Sam began tracking the data quarterly in 1947.
I'll close with one more look at GDP -- the year-over-year percent change, which is perhaps the most disturbing perspective on where we are in the grand scheme of things. Clearly evident is the downward trend and the fact that all but one of the 11 recessions over this timeframe began with the YoY real GDP higher than last quarter.
The October WSJ survey included the routine question about the probability of a recession in the U.S. in the next 12 months (scale of 0 to 100). The average of the responses was 16%.
In response to a multiple-choice question about a taper announcement from the Fed in October, the responses were evenly split:
- 33% - Yes
- 36% - No, it should wait until later this year
- 31% - No, it should wait until next year