Tuesday, September 26, 2023
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Forecasting and Nowcasting and Recessions

Forecast patterns from surveys of professional forecasters over the past three quarters suggest that the recession is receding. Today’s Atlanta Fed’s Q2 GDPNow seems to confirm the absence of a recession in Q2 2023.

figure 1: GDP (bold black), Professional Forecasters Survey May median (blue), February median (tan), November 2022 median (teal) and 6/7 of GDPNow (sky blue Colored squares), all in billions Ch.2012$ SAAR. Source: BEA 2023Q1 Second Edition, Federal Reserve Bank of PhiladelphiaAtlanta Fed, and author’s calculations.

As of today, S&P Global Market Insights formerly IHS Markit/Macroeconomic Advisers said 2.8% in Q1 and 0.8% in Q2 (SAAR). GS tagged second-quarter growth at 1.7% (2.1% on final sales).

In newer forecasts than the May SPF (these forecasts were collected at the end of April), Yang et al. DB noted today that their final sales growth tracker is trending towards zero in the second quarter, “survey: growth near stagnation pace, not yet negative”.

This view is consistent with my view (based on term spread models etc) that a recession is more likely to start in 3Q-4Q 2023 (here I am assuming that the slowdown in growth coincides with other broad indicators such as employment and occurred) revenue decline).this is also The last FT-IGM survey was conducted in mid-March. FT-IGM survey will be out soon, we will wait and see

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