GDP Forecasts

The October Wall Street Journal survey of economists, now quarterly, is out. A substantial downshift in the forecasted level of GDP is apparent.

Figure 1: GDP (bold black), November 2020 WSJ survey mean (red), July 2021 survey mean (blue), and October 2021 survey mean (green). NBER defined recession dates shaded gray. Source: BEA, WSJ (various surveys), NBER, and author’s calculations.

In early November 2020, the average forecast was for a slow closing of the output gap (using potential GDP as estimated by the CBO in July of this year). By July, optimism had built, implying a zero output gap by mid-2021. As of the October survey, the closing of the output gap had been pushed back to mid-2022 (For an alternative view of the “output gap”, see this post).

Figure 2: GDP (bold black), October 2021 WSJ survey mean (green), Survey of Professional Forecasters August survey mean (blue). FT-IGM September survey median (sky blue square), IMF World Economic Outlook October forecast (pink triangle). NBER defined recession dates shaded gray. Source: BEA, Philadelphia Fed, FT-IGM survey, IMF, WSJ (various surveys), NBER, and author’s calculations.

Certainly, the short term outlook does seem a bit lackluster, as indicated by monthly metrics (e.g., industrial production, in this post), and by GDP nowcasts (as of today, IHS-MarkIt is at 1.4% q/q SAAR for Q3).

The IMF remains noticeably more optimistic than the average WSJ survey respondent, looking more like the Survey of Professional Forecasters prediction.