Recession Risks: The View from Wall Street Economists

The Wall Street Journal‘s June survey of economists is out. Interestingly, no one’s mean forecast is for two quarters of negative growth in 2016Q2-Q3 (or even one quarter!), but the assigned probabilities of recession remain elevated.

One point 1, see this histogram.

Figure 1: Histogram of average growth rates for 2016Q2-2016Q3 (SAAR). Source: June 2016 WSJ survey for economists, and author’s calculations.

On point 2, see this time series of recession probability assessments:

Figure 2: Recession probability assessments. Source: June 2016 WSJ survey for economists, and author’s calculations.

The mean probability assessment is 20.7% for a recession in the next 12 months. So while not a single forecaster predicts 2 quarters — or even a single — of negative growth in 2016Q1-Q2 (as shown in Figure 1), some forecasters do perceive substantial downside risks. The risks they see are recounted in Josh Zumbrun’s WSJ RTE post

So I won’t say definitively we are not in, or not close to, a recession (i.e., I won’t “Pull an Ed Lazear”). But Figure 1 contrasts strongly with the situation in May 2008, when the WSJ survey looked like this (as shown in this post), and several forecaster were predicting negative growth.

Figure 3: Quarter on quarter SAAR growth forecasts for 2008Q2, from Wall Street Journal May 2008 survey. Source: WSJ.

In fact the modal forecast was negative 1% when then CEA Chair Lazear said we were not in a recession.