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The GDP outlook is down markedly. I was insufficiently pessimistic (relative to WSJ survey respondents) regarding the GDP outlook.

Figure 1: GDP (bold black), WSJ January survey mean (blue), WSJ April survey mean (tan), GDPNow of 4/9 (sky blue square), Chinn forecast for FT-Booth March survey (red square), all in billions Ch.2017$ SAAR. Source: BEA 2024Q4 3rd release, WSJ surveys.

There is a wide range of outcomes predicted for Q3 and Q4, in terms of output levels. While the mean trajectory is positive, the trimmed 20% band includes two quarters of negative growth (Carlton Strong/JP Morgan).

Figure 2: GDP (bold black), WSJ January survey mean (blue), WSJ April survey mean (tan), 20% trimmed high (Sean Snaith/U.Central Florida), low (Carlton Strong/JP Morgan) (gray lines), GDPNow of 4/9 (sky blue square), Chinn forecast for FT-Booth March survey (red square), all in billions Ch.2017$ SAAR. Source: BEA 2024Q4 3rd release, WSJ April survey.

In point of fact, there are 13 respondents predicting two or more quarters of consecutive negative GDP growth. Of course, two consecutive quarters of negative growth does not officially define a recession; rather, the NBER’s Business Cycle Dating Committee has the greatest claim to defining recessions.

Figure 3: Respondents predicting a recession within the next 12 months, % (black). NBER defined peak-to-trough recession dates shaded gray. Source: WSJ April survey, and NBER.

The number of respondents predicting a recession rose from 22% to 45% in three months. This is the largest 3-month increase recorded, excepting the 2020M04 and 2008M12 readings.

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